Stocks are on the brink of witnessing the
worst start since 1970, as quoted on Yahoo Finance. Only five times since 1932, the S&P 500 has tumbled 15% or more in the first six months of a year. The S&P 500 is off 19.8% so far this year. The Nasdaq Composite is down 28.5%, the Dow Jones has lost 14.8% and the Russell 2000 is off 22.6% year to date.
The year has been caught up with high inflationary pressure across the world due to supply-chain issues, the Russia-Ukraine war, high energy prices, a commodity super-cycle, a super-hawkish Fed, rising rates across the globe as central banks have been tightening policies to rein in inflation, risk-off trade sentiments and a global market crash.
The S&P 500 and the Nasdaq have entered into correction territory this year, with recessionary fears flaring up. The Fed has started rate hikes and enacted a 150-bp rise already, which has caused recessionary fears.
SPDR Gold Shares ( GLD Quick Quote GLD - Free Report) is off 0.8% this year, while iShares 20+ Year Treasury Bond ETF ( TLT Quick Quote TLT - Free Report) has lost about 24%.
Against this backdrop, below, we highlight a few top-performing inverse/leveraged ETFs of the first half.
ETFs in Focus Direxion Daily Dow Jones Internet Bear 3X Shares ( WEBS Quick Quote WEBS - Free Report) – Up 180.9%
Rising rate worries have dampened the appeal for stocks that rely on easy borrowing for superior growth. Technology falls in this category. In any case, tech stocks, especially the Internet ones, are guilty of overvaluation. As a result, inverse leveraged internet ETFs gained massively in the first half.
MicroSectors U.S. Big Oil Index 3X Leveraged ETN ( NRGU Quick Quote NRGU - Free Report) – Up 145%
The coronavirus vaccine rollout is gradually helping to control the spread of the outbreak across the globe. This is helping in economic reopening and boosting oil demand. Factors like easing Omicron variant concerns, supply shortages, and geopolitical tensions in Eastern Europe and the Middle East have thus boosted oil prices this year.
United States Oil Fund, LP (USO) has advanced 50% this year and United States Brent Oil Fund LP ( BNO Quick Quote BNO - Free Report) is up 56%.
The MicroSectors U.S. Big Oil Index 3X Leveraged ETNs provide levered exposure to the Solactive MicroSectors U.S. Big Oil Index.
ProShares Ultra Bloomberg Natural Gas (BOIL) – Up 139.7%
Natural gas futures spiked to a more than decade-high level on tight supply conditions, occasional adverse weather and declining inventories. The jump in prices came as the conflict between Russia and Ukraine sparked fears of global supply disruption in an already tight-supply market. Western countries have slapped severe sanctions against Russia over Ukraine, disrupting trade flows. Sanctions by the United States and other countries will force Russia to supply less natural gas, thereby pushing prices higher.
The ProShares Ultra Bloomberg Natural Gas seeks daily investment results, before fees and expenses, that correspond to two times (2X) the daily performance of the Bloomberg Natural Gas Subindex.
ProShares UltraPro Short 20+ Year Treasury ( TTT Quick Quote TTT - Free Report) – Up 100.9%
As rates have risen in the first half, treasury bond prices fell as bond prices are inversely related to the bond yields. The benchmark treasury yield hovered in the range of as high as 1.63% to 3.49% this year on faster Fed rate hikes. The ProShares UltraPro Short 20+ Year Treasury seeks daily investment results, before fees and expenses that correspond to three times the inverse of the daily performance of the ICE U.S. Treasury 20+ Year Bond Index.