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Best Leveraged ETF Areas of Last Week

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Wall Street was modestly upbeat last week. The S&P 500, the Dow Jones, the Nasdaq and the Russell 2000 added 2.5%, 1.8%, 4.32% and 2.4% last week, respectively. The U.S. benchmark treasury yields were modest on most days last week. The week started with a 3.52% yield and ended at that level only while hitting a weekly low of 3.46%. The decline in the U.S. treasury yields triggered the stock market rally.

Last week witnessed the release of fourth-quarter U.S. GDP data and earnings of some big companies. The American economy expanded faster than expected in the fourth quarter, with GDP rising 2.9% annually versus a 2.6% expectation. Though the economy has been resilient, the pace of momentum has slowed in recent months due to stubborn inflation, rising interest rates and battered financial markets. The GDP growth marks a slowdown from the 3.2% advancement in the third quarter.

Earnings missed the consensus mark in most cases. Tesla beat overall while Intel shares plunged on earnings miss and weak guidance. Chevron came up with mixed earnings but boosted its dividends and announced a new buyback plan. Microsoft shares fell after reporting weak sales and cloud business.  Against this backdrop, below, we highlight a few inverse/leveraged ETF areas of the last week.

ETF Areas in Focus

Leveraged Tesla

Daily Tesla Bull 1.5X ETF Direxion (TSLL - Free Report) – Up 52.5%

Graniteshares Tesla 1.25X Daily ETF (TSL - Free Report) – Up 42.7%

Electric and Autonomous 2X ETF Direxion (EVAV) – Up 29.9%

Tesla Motors (TSLA), which erased 65% of its value in 2022 for its worst year on record, rallied 11% on Friday due to strong earnings. Tesla reported record-breaking Q4 results, wherein it beat both earnings and revenue estimates. The company posted record quarterly revenues, operating income and net income in its history (read: ETFs to Buy on Tesla's Record-Breaking Q4 Results).

In 2022, the electric carmaker delivered a record 1.31 million electric vehicles, up 40% from 2021. It has ramped up production after opening new factories in Texas, Shanghai and Berlin. As a result, leveraged Tesla ETFs gained massively last week.

Leveraged FANG+

Microsectors Fang+ 3X ETN (FNGU - Free Report) – Up 28.5%

Microsectors Fang & Innovation 3X ETN (BULZ - Free Report) – Up 23.8%

Microsectors Fang+ 2X ETN (FNGO) – Up 18.6%

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.

Leveraged Consumer Discretionary

Consumer Discretionary Bull 3X Direxion (WANT - Free Report) – Up 19.6%

Retail Bull 3X Direxion (RETL - Free Report) – Up 16.6%

The University of Michigan consumer sentiment for the United States was revised higher to 64.9 in January of 2023, the highest since April, from a preliminary of 64.6. The gauge for expectations was revised higher to 62.7 from 62. Falling inflation and chances of lower rates (in the coming days) are also favoring consumer sentiment and spending.

Leveraged Semiconductor

Semiconductor Bull 3X Direxion (SOXL - Free Report) – Up 17.1%

Semiconductor stocks reported a rally last week. Output and capital investment cuts are tailwinds for semiconductor stocks, as they supposedly improve chip prices, and thus, manufacturers' earnings. The reopening of the Chinese economy acted as a tailwind.

Leveraged High Beta

S&P 500 High Beta Bull 3X Direxion (HIBL - Free Report) – Up 14.3%

The underlying S&P 500 High Beta Index selects 100 securities from the S&P 500 Index that have the highest sensitivity to beta over the past 12 months. The recent uptick in the risk-on sentiments favored high-beta investing.

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