Wall Street was upbeat last week with the S&P 500 (up 1.8%), the Dow Jones (up 2.0%), the Nasdaq Composite (up 2.0%) and the Russell 2000 (up 3.3%) gaining in the range of 1.8% to 3.3%. Notably, the tech-heavy Nasdaq has been in high momentum and closed out the first six-week rally since January 2020.
Last week was marked by a few market-moving events. The Senate passed a bill late Thursday evening to suspend the nation's debt limit through Jan 1, 2025, averting the first-ever U.S. default just days ahead of the deadline. The House had passed the deal earlier last week.
Jobs data for the month of May came in super upbeat. The U.S. economy added 339,000 jobs in May 2023, the maximum in four months, breezing past market forecasts of 190,000. Figures for March and April were revised up, taking employment 93,000 higher than previously reported. Figures hint at a tight labor market, with employment rising an average of 314,000 per month so far this year.
However, all is not upbeat in the U.S. economy. The May manufacturing PMI recorded 46.9%, 0.2 percentage points lower than 47.1% posted in April. Regarding the overall economy, this figure indicates a
sixth month of contraction after a 30-month period of expansion.
Inflation in the Euro zone eased more than expected in May, with flash figures showing the bloc's annual headline inflation rate dropping to 6.1% in May from 7% in April. This marked the lowest level since February 2022. Economists polled by Reuters
had expected a May reading of 6.3%.
The jobs report has raised the probability of a rate hike in July. Additionally, inflation remains sticky, making it difficult for the Fed to cut rates later this year. Hence,
Invesco DB US Dollar Index Bullish Fund ( UUP Quick Quote UUP - Free Report) was flat last week and exhibited an uptrend to close out the week.
Against this backdrop, below, we highlight a few winning inverse/leveraged ETFs of last week.
ETFs in Focus Ultrashort Bloomberg Natural Gas -2X ETF ( KOLD Quick Quote KOLD - Free Report) ) – Up 25.9%
Energy prices have declined amid signs of faltering demand and an adequately stocked supply as well as mild U.S. weather. A weekly EIA storage report was also bearish, as it revealed a 110 billion cubic feet injection that topped both forecasts and averages and kept an inventory surplus at
a 17% above-normal level, per fxstreet.com. This has boosted inverse leveraged natural gas prices. Daily Tesla Bull 1.5X ETF Direxion ( TSLL Quick Quote TSLL - Free Report) ) – Up 24.6%
Elon Musk’s Tesla has received a tailwind for his electric-vehicle price war thanks to President Joe Biden’s signature climate legislation. Tesla’s price cuts prompted an online traffic spike, which can result in higher sales. Tesla was up 11% last week.
Microsectors Fang & Innovation 3X ETN ( BULZ Quick Quote BULZ - Free Report) – Up 22.2%
A surge in optimism around the demand for technologies and artificial intelligence (AI) boom continued last week too. Notably, mega-cap tech stocks have made a strong comeback this year and are leading the stock market rally. The hype surrounding AI, easing inflation, chances of lower rates, upbeat corporate earnings and investors’ flight to mega-cap tech stocks have been driving the space higher.
Consumer Discretionary Bull 3X Direxion ( WANT Quick Quote WANT - Free Report) – Up 17.4%
Despite talks about an impending recession, U.S. consumers showed immense resilience. The Memorial Day travel data bears testimony. Memorial Day holiday weekend
air travel surpassed the pre-pandemic level. Consumers’ savings are in decent shape and the leisure industry has been gaining back the lure lost in the pandemic. No wonder, cyclical sectors like consumer discretionary fared better last week.