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Best Leveraged Equity ETF Areas of Last Week

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Wall Street ended its seven-week losing streak last week. The S&P 500 recorded its best week since November 2020. The S&P 500 was up 6.6% last week while the Nasdaq Composite was off 6.8%. The Dow Jones Industrial Average Index, which saw its first eight-week losing streak since 1923 in the week ending May 20, advanced 6.2% last week. Small-cap index Russell 2000 gained 6.9%.

Earnings results from several retailers also rekindled bullishness among investors. Macy’s (M) shares were up 19.3% on May 26 on the lifted guidance for the 2022 profit levels. Dollar Tree (DLTR) also rose 21.9% on an earnings beat. Another dollar store Dollar General (DG) also gained 17.5% last week following consumers’ inclination for shopping at dollar stores amid high inflation. Retailer Nordstrom (JWN) jumped 24% last week due to an earnings beat.

Airlines including JetBlue (JBLU) and Southwest (LUV) upped their sales guidance for the current quarter, suggesting upbeat demand discretionary travel. The Memorial Day weekend and the related uptick in discretionary spending also contributed to the market rally last week.

Adding to the upbeat scenario is the decline in the initial jobless claims for the week ended May 21. The same came in at 210,000, declining from the previous week’s reading of 218,000, per a CNBC article. Also, certain U.S. economic data releases have been encouraging so far.

The Federal Reserve reported that industrial production increased 1.1% last month, well above the consensus estimate of 0.5%. Headline personal consumption expenditures (PCE) increased 6.3% in April over last year compared to March's 6.6% increase, and core PCE rose by 4.9% compared with 5.2% in the prior month.

Quincy Krosby, chief equity strategist for LPL Financial, believes that U.S. consumer spending is relatively strong. In this regard, she mentioned that the data releases last week “suggest the economy is slowing, and the Fed appears poised to raise rates at a 50 basic point clip over the next two months. But the notion that the consumer, 70 percent of the U.S. economy, is on a spending strike, is overblown as earnings reports coupled with positive guidance indicate otherwise,” as stated in a CNBC article.

Against this backdrop, below we highlight a few equities leveraged ETF areas that topped the list last week.

ETF Areas in Focus

Leveraged Banks

As the yield curve gradually steepened for most of last week, bank stocks gained in returns.

MicroSectors U.S. Big Banks Index 3X Leveraged ETNs (BNKU - Free Report) – Up 15%

Direxion Daily Financial Bull 3X Shares (FAS - Free Report) – Up 15%

Leveraged Energy

The uptick in demand and supply shortages (due to restrained production and the Russia-Ukraine war) kept energy prices on a tear.

Direxion Daily S&P Oil & Gas Exp. & Prod. Bull 2X Shares (GUSH - Free Report) – Up 22.7%

MicroSectors U.S. Big Oil Index 3X Leveraged ETN (NRGU - Free Report) – Up 19.3%

Leveraged Homebuilding

Cheaper valuation probably made this space a winner last week. In mid-May, the average forward price/earnings ratio of homebuilder stock prices to projected 2022 earnings was only 3.5 times earnings, one of the lowest in the entire U.S. stock market, per a CNBC article.

Direxion Daily Homebuilders & Supplies Bull 3X Shares (NAIL - Free Report) – Up 16.1%

Leveraged Transportation

Higher demand for transportation in the Memorial Day weakened travel boosted the ETF. Plus, the airlines industry is rebounding.

Direxion Daily Transportation Bull 3X Shares (TPOR - Free Report) – Up 15.9%

Leveraged Retail

As stated above, several retailers came up with upbeat earnings last week, acting as a cornerstone for the entire space.

Direxion Daily Retail Bull 3X Shares (RETL - Free Report) – Up 14.7%