Back to top

Image: Bigstock

S&P 500's Second-Best Week in 2022: Best Leveraged ETFs

Read MoreHide Full Article

U.S. stocks saw a massive jump on the final trading session of last week, with the S&P 500 snapping a three-week losing streak as investors digested the Federal Reserve officials' latest affirmations that they are focused on lowering inflation. The S&P 500 advanced more than 3% on Friday, logging back-to-back days of gains and marking its first weekly advance since late May.

Powell's assertion that the Fed's commitment to handling inflation is "unconditional" indicated that the central bank would not stop hiking rates in modest signs of economic slowdown or recession. The S&P 500 (up 6.45%), the Dow Jones (up 5.4%), the Nasdaq Composite (up 7.5%) and the Russell 2000 (up 6%) saw handsome gains last week.

Cyclical stocks — seen as more vulnerable during downturns — lagged last week, with the energy sector recording a weekly loss and the materials sector also underperforming. West Texas intermediate crude oil futures hovered around $107 per barrel and recorded its third straight weekly loss. The commodity and is on its way to the first monthly loss since November.

Among big market news, Wall Street’s largest banks are ready to return excess capital to shareholders in the form of dividends and share buybacks after all of them cleared the Federal Reserve’s 2022 Stress Test. The annual stress tests were established by the Fed, following the 2008 financial crisis, as a measure to ensure that banks could withstand any similar shock in the future.

This year, all the 34 biggest lenders that tested have cleared the results. The 2022 stress tests’ focus is on an employment crisis that sends the jobless rate to more than 10% for at least two years, plus a 40% drop in commercial real estate prices. While this year’s scenarios were devised before the Russia-Ukraine conflict and the current red-hot inflation, they indicate that the banks are well-prepared for a potential U.S. recession, which is predicted for later this year or the next.

Against this backdrop, below we highlight a few leveraged ETFs that gained massively last week.

S&P Biotech Bull 3X Direxion (LABU - Free Report) – Up 69.7%

As the markets recovered, the beaten-down zones recoiled faster. Biotech is one such area.

DJ Internet Bull 3X Direxion (WEBL - Free Report) – Up 42.3%

Technology is one of the most losing sectors in recent weeks as rising rate worries weighed on it massively. Amid slight cues of market recovery, the tech sector rebounded heavily.

Direxion Large Caps & Fangs Bull 2X ETF (FNGG) – Up 39.56%

Large caps and FANG stocks also won massively last week.

Ultrashort Bloomberg Natural Gas ETF (KOLD - Free Report) – Up 35.1%

As energy prices started falling after a massive rally, the leveraged inverse ETF KOLD’s decline is self-explanatory.

Ultra Nasdaq Cloud Computing ETF (SKYU) – Up 34%

Cloud computing ETF SKYU too gained more than 30% last week as the tech sector rally was quite pronounced.