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Best Leveraged ETF Areas of Last Week

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Wall Street delivered a moderate performance last week with the S&P 500 and the Dow Jones adding 0.7% and 0.9%, respectively and the Nasdaq Composite losing 0.1% last week. However, the Dow Jones and the S&P 500 were at records with longest streak of closing records since March, per a MarketWatch article.

A few updates led to this result. Optimism about corporate earnings and upbeat economic data points and the passage of the infrastructure bill helped two key U.S. equity indexes go higher (read: 4 Sector ETFs to Gain from Infrastructure Bill).

However, the University of Michigan consumer-sentiment index fell to 70.2 in August from 81.2 in prior month, marking the lowest level since April of 2020. This piece of information subdued the market mood to some extent.

There were talks of rising rate worries as two Fed officials gave cues of a QE tapering in the near term. This has favored value stocks more than the growth stocks. Against this backdrop, below we highlight a few leveraged ETFs that won last week.

ETFs in Focus

Natural Gas  

Ultrashort Bloomberg Natural Gas ETF (KOLD - Free Report) – Up 13.9%

Natural gas prices fell on the U.S. inventory report Department of energy. Plus, tropical Storm Fred was demoted to a Tropical Depression in the Caribbean.

The ProShares UltraShort Bloomberg Natural Gas seeks daily investment results, before fees and expenses, that correspond to two times the inverse (-2x) of the daily performance of the Bloomberg Natural Gas Subindex.

Transportation

Transportation Bull 3X Direxion (TPOR - Free Report) – Up 8.57%

The passage of infrastructure bill is a tailwind for the space. About $110 billion is allocated to roads, bridges, and major projects while $66 billion is allocated toward passenger and freight rail. About $39 billion went to public transit while $25 billion is kept for airports.

The Direxion Daily Transportation Bull 3X Shares seeks daily investment results, before fees and expenses, of 300% of the performance of the Dow Jones Transportation Average Index.

Big Banks

Microsectors 3X U.S. Big Banks ETN (BNKU - Free Report) – Up 8.24%

The benchmark U.S. treasury yield move up to 1.29% on Aug 13, 2021 from 1.33% on Aug 9, 2021 with a high of $1.36%. Two Federal Reserve officials recently said that the U.S. economy is advancing steadily. Though the labor market still has room for improvement, inflation is running high and may compel the Fed to taper QE.

Atlanta Federal Reserve Bank President Raphael Bostic said he is eyeing the fourth quarter for the start of a bond-purchase taper but can support an even earlier start if the job market records faster improvement. As banks fare well in a steepening yield curve environment, big bank ETFs have every reason to soar (read: Is Taper-Tantrum Looming Ahead? 6 ETF Plays).

The MicroSectors U.S. Big Banks Index 3X Leveraged ETN is linked to three times leveraged participation in the performance of the Solactive Microsectors U.S. Big Banks Index.

Homebuilding  

Homebuild & Suppliers Bull 3X Direxion (NAIL - Free Report) – Up 7.96%

The benchmark U.S. treasury yield dropped to 1.29% on Aug 13 from 1.36% recorded on the day earlier due to downbeat consumer sentiment data. This has boosted the appeal for homebuilding which thrives on low rates.  

The Direxion Daily Homebuilders & Supplies Bull 3X Shares seeks daily investment results, before fees and expenses, of 300% of the performance of the Dow Jones U.S. Select Home Construction Index. The fund’s expense ratio is 1.00%.