Wall Street was downbeat last week, with losses seen in all major indexes. The S&P 500 (down 2.41%), the Dow Jones (down 2.14%), the Nasdaq Composite (down 2.8%) and the Russel 2000 (down 2.6%) shed gains by around 2%.
Inflation data for April was released last week. The world’s largest economy continues to struggle with the persistently-high inflation levels. Per the latest Labor Department report, the Consumer Price Index (CPI) jumped 8.3% year over year in April, surpassing the already high Dow Jones estimate of an 8.1% rise. The metric, however, compared favorably with the 8.5% rise (the maximum since December 1981) in March.
April’s U.S. inflation print strengthened expectations that the Fed will continue its aggressive rate hike. The Fed hiked the rate in March by 25 bps and in May by 50 bps (which is the highest magnitude in two decades). Markets are pricing in another 190-basis-point rate hike in 2022.
Concerns that tighter monetary policies to tame surging inflation will slow down global economic growth have in turn weighed on the risk sentiment and driven investors toward the safe-haven currency greenback.
The dollar stands at a two-decade high against the Japanese yen and a more than five-year high against the euro, after rising 13% and 8%, respectively, against the currencies this year.
SPDR Gold Shares ( GLD Quick Quote GLD - Free Report) was off 2.5% last week as gold is priced in the greenback.
Companies pointing to currency headwinds in their latest earnings reports include Coca-Cola Co, Procter & Gamble and Philip Morris International Inc. Analysts cut their overall forecast for S&P 500 second-quarter profit growth to 5.6% from 6.8% at the start of April owing to the current headwinds,
per a Reuters article.
As far as benchmark U.S. treasury yields are concerned, the week started with 3.05% yield and ended at 2.93%. Yields declined steadily in the first four days of the week to 2.84% and then spurted back to 2.93% on Friday.
This happened because investors sought bonds’ safety amid renewed recessionary concerns. And due to a decline in the long-term bond yields, financial stocks were heavily battered last week, offering a considerable rise to the inverse financial ETFs.
Against this backdrop, below, we highlight a few winning inverse/leveraged ETF areas of last week.
ETFs in Focus Inverse/Leveraged Gold Miners
Microsectors Gold Miners -3X ETN (
GDXD Quick Quote GDXD - Free Report) – Up 31.9%
Gold Miners Bear 2X Direxion (
DUST Quick Quote DUST - Free Report) – Up 21.2%
Junior Gold Mine Bear 3X Direxion (
JDST Quick Quote JDST - Free Report) – Up 21.2% Inverse/Leveraged Financials
Microsectors -3X U.S. Big Banks ETN (
BNKD Quick Quote BNKD - Free Report) – Up 13.3%
Financial Bear 3X Direxion (
FAZ Quick Quote FAZ - Free Report) – Up 9.2%
Ultrashort Financials ETF (
SKF Quick Quote SKF - Free Report) – Up 6.1% Inverse Leveraged Real Estate
Real Estate Bear 3X Direxion (
DRV Quick Quote DRV - Free Report) – Up 10% Inverse/Leveraged Energy
S&P Oil & Gas Expl Bear 3X Direxion (
DRIP Quick Quote DRIP - Free Report) – Up 8.8% Inverse Leveraged Technology
Technology Bear 3X Direxion (
TECS Quick Quote TECS - Free Report) – Up 8.2%