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Wall Street was upbeat with the S&P 500 (up 1.45%), the Dow Jones (up 1.5%), the Nasdaq (up 1.0%) and the Russell 2000 (up 1.8%) offering decent returns last week. The week started with 3.79% of the 10-year U.S. treasury yield and ended at 3.55%. The decline in the U.S. treasury yield triggered the stock market rally.
The ISM Manufacturing PMI for the United States declined to 48.4 in December of 2022, slightly below forecasts of 48.5, pointing to the second successive month of contraction in factory activity as Americans are shifting spending away from goods to services. Barring the decline in April 2020 at the peak of the covid pandemic, this marked the lowest reading since February 2016.
The United States economy added 223, 000 jobs in December of 2022, the least since December of 2020, after a downwardly revised 256, 000 rise in November, and beating market expectations of 200, 000. The U.S. unemployment rate fell to 3.5% in December 2022, falling shy of market expectations of 3.7% and matching the rates seen in September and July, which were the lowest since February 2020.
Such downbeat data points gave cues of softer U.S. rate hikes in the coming days. There are 75.7% chances of 25 bps rate hike in the next Fed meeting. Current target rate is 425 – 450 bps. Against this backdrop, below we highlight a few inverse/leveraged ETFs of the last week.
ETFs in Focus
South Korea
South Korea Bull 3X Direxion (KORU - Free Report) – Up 15.6%
South Korean shares registered their best session in nearly two months last week, supported by strong performances by heavyweight chipmakers and online platform operators. Chipmakers' gains came in a day after South Korea launched plans to offer large tax breaks to semiconductor and other technology companies investing at home, per marketscreener.com.
Semiconductor stocks reported a rally last week as “there were also rumors that Samsung Electronic might cut its capital investment and a media report on chip investment cuts in China," said Huh Jae-hwan, analyst, Eugene Investment and Securities, as quoted on marketscreener.com. Output and capital investment cuts are tailwinds for semiconductor stocks, as they supposedly improve chip prices, and thus, manufacturers' earnings.
Transportation stocks too staged a rally last week. The Direxion Daily Transportation Bull 3X Shares look to track daily investment results of 300% of the performance of the S&P Transportation Select Industry FMC Capped Index.
As rates plunged, beaten-down growth stocks made a comeback. As technology stocks fall under the spectrum, FANG stocks gained last week. The MicroSectors FANG & Innovation 3x Leveraged ETN are linked to three times leveraged participation in the performance of the Solactive FANG Innovation Index, compounded daily, minus the applicable fees.
Metal Miners
Direxion Daily Metal Miners Bull 2X – Up 8.9%
Global mining stocks gained last week. Britain's FTSE 100 index touched a more than three-year high last week, underpinned by miners and energy stocks, while slower-than-expected U.S. jobs growth fueled hopes that the world's largest economy may be less aggressive in raising interest rates. The Direxion Daily Metal Miners Bull 2X Shares looks to track daily investment results of 200% of the performance of the S&P Metals and Mining Select Industry Index.
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Best Inverse/Leveraged ETFs of Last Week
Wall Street was upbeat with the S&P 500 (up 1.45%), the Dow Jones (up 1.5%), the Nasdaq (up 1.0%) and the Russell 2000 (up 1.8%) offering decent returns last week. The week started with 3.79% of the 10-year U.S. treasury yield and ended at 3.55%. The decline in the U.S. treasury yield triggered the stock market rally.
The ISM Manufacturing PMI for the United States declined to 48.4 in December of 2022, slightly below forecasts of 48.5, pointing to the second successive month of contraction in factory activity as Americans are shifting spending away from goods to services. Barring the decline in April 2020 at the peak of the covid pandemic, this marked the lowest reading since February 2016.
The United States economy added 223, 000 jobs in December of 2022, the least since December of 2020, after a downwardly revised 256, 000 rise in November, and beating market expectations of 200, 000. The U.S. unemployment rate fell to 3.5% in December 2022, falling shy of market expectations of 3.7% and matching the rates seen in September and July, which were the lowest since February 2020.
Such downbeat data points gave cues of softer U.S. rate hikes in the coming days. There are 75.7% chances of 25 bps rate hike in the next Fed meeting. Current target rate is 425 – 450 bps. Against this backdrop, below we highlight a few inverse/leveraged ETFs of the last week.
ETFs in Focus
South Korea
South Korea Bull 3X Direxion (KORU - Free Report) – Up 15.6%
South Korean shares registered their best session in nearly two months last week, supported by strong performances by heavyweight chipmakers and online platform operators. Chipmakers' gains came in a day after South Korea launched plans to offer large tax breaks to semiconductor and other technology companies investing at home, per marketscreener.com.
Semiconductors
Semiconductor Bull 3X Direxion (SOXL - Free Report) – Up 13.6%
Semiconductor stocks reported a rally last week as “there were also rumors that Samsung Electronic might cut its capital investment and a media report on chip investment cuts in China," said Huh Jae-hwan, analyst, Eugene Investment and Securities, as quoted on marketscreener.com. Output and capital investment cuts are tailwinds for semiconductor stocks, as they supposedly improve chip prices, and thus, manufacturers' earnings.
Transportation
Transportation Bull 3X Direxion (TPOR - Free Report) – Up 10.9%
Transportation stocks too staged a rally last week. The Direxion Daily Transportation Bull 3X Shares look to track daily investment results of 300% of the performance of the S&P Transportation Select Industry FMC Capped Index.
FANG
Microsectors Fang & Innovation 3X ETN (BULZ - Free Report) – Up 9.2%
As rates plunged, beaten-down growth stocks made a comeback. As technology stocks fall under the spectrum, FANG stocks gained last week. The MicroSectors FANG & Innovation 3x Leveraged ETN are linked to three times leveraged participation in the performance of the Solactive FANG Innovation Index, compounded daily, minus the applicable fees.
Metal Miners
Direxion Daily Metal Miners Bull 2X – Up 8.9%
Global mining stocks gained last week. Britain's FTSE 100 index touched a more than three-year high last week, underpinned by miners and energy stocks, while slower-than-expected U.S. jobs growth fueled hopes that the world's largest economy may be less aggressive in raising interest rates. The Direxion Daily Metal Miners Bull 2X Shares looks to track daily investment results of 200% of the performance of the S&P Metals and Mining Select Industry Index.