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Best Inverse/Leveraged ETFs of Last Week

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Wall Street was pretty upbeat with the S&P 500 (up 2.67%), the Dow Jones (up 2.0%), the Nasdaq (up 4.8%) and the Russell 2000 (up 5.3%) offering superb returns last week. The S&P 500 and the Nasdaq logged their best week since November, per CNBC. The 10-year U.S. treasury yield started the week at 3.53%, hit a high of 3.61% and ended at 3.49%. The decline in the U.S. treasury yield triggered the stock market rally.

The consumer price index dipped 0.1% in December after gaining 0.1% in November. It rose 6.5% year over year in December, down from a 7.1% year-over-year increase in November and a recent peak of 9.1% in June. The annual inflation growth was the smallest rise since October 2021. The data has put the Federal Reserve on track to again slow the pace of interest-rate hikes.

The latest job data showed a deceleration in wage growth, which gave investors hope that the Fed could ease off on its interest-rate increases, resulting in a boost to the equity market. 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

GraniteShares 1.5x Long Coinbase Daily ETF (CONL - Free Report) – Up 81% Past Week

Bitcoin surged last week amid optimism that it may have bottomed. Talks that inflation has peaked and will exhibit a downtrend in 2023 are doing rounds. This has bolstered the risk-on trade sentiments and favored the beaten-down asset cryptocurrency. 

Direxion Daily Electric and Autonomous Vehicles Bull 2X Shares (EVAV - Free Report) – Up 35.5%

The underlying Indxx U.S. Electric and Autonomous Vehicles Index track the performance of electric and autonomous vehicles companies. The index is heavy on stocks like Tesla, Nio and Lucid. All these staged a huge rally last week with Lucid gaining 20% while Nio adding about 10%. The return of risk-on sentiments and the opening of the Chinese economy probably have led to the rally in electric vehicle stocks and ETFs.

MicroSectors Travel 3x Leveraged ETN (FLYU - Free Report) – Up 33.9%

The MicroSectors Travel 3x Leveraged ETN is linked to three-times leveraged participation in the performance of the MerQube MicroSectors U.S. Travel Index, compounded daily, minus the applicable fees. The index is a total return index that tracks the stock prices of U.S. domiciled and listed securities that are materially engaged in specified segments of the travel industry. The reopening of China’s economy probably has led to the gains in travel shares.

AXS 2X Innovation ETF (TARK - Free Report) – Up 30.7%

The tech and the other growth sectors, which were the biggest victims of surging yields last year, is the outperformers now. This is especially true as inflation has been easing and consumer confidence is rising. The latest job data showed a deceleration in wage growth, which gave investors hope that the Fed could ease off on its interest-rate increases, resulting in a boost to tech shares (read: 5 Stocks Powering Nasdaq ETF to Start 2023).    

MicroSectors FANG+ Index 3X Leveraged ETN (FNGU - Free Report) – Up 27.1%

As rates dived last week, growth stocks gained. FANG stocks were heavily beaten-down last year but bucked the losing trend to start 2023 as these perform better in a low-rate environment.

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