Wall Street gave a muted performance last week as the S&P 500 and the Nasdaq snapped the prolonged winning streak. The S&P 500 (down 1.4%), the Dow Jones (down 1.7%) and the Nasdaq (down 1.4%) — the three big U.S. equity indexes — took a dive last week. The reason behind the fall was renewed rate hike worries.

The benchmark U.S. treasury yield was 3.77% at the start of the week, which ended at 3.74%, having hit a high of 3.80% on Jun 22, 2023. Fed Chair Jerome Powell stated last week that most central bank officials anticipate raising interest rates by the end of 2023. While the Fed decided to maintain the target range at the June policy meeting, Powell's remarks point to the tightening of the monetary policy all over again.

Median expectation for funds rates now stands at 5.6% by the end of 2023. This implies two more quarter-point hikes in the remaining meetings this year, creating a very hawkish pause. Three officials see rates rising closer to 6%. The next Fed meeting at the end of July means a lot to investors. About 80% chance of a rate hike in July is currently priced in.

While rising rate worries weighed on growth sectors like technology, several analysts also started believing that several growth stocks are overvalued. Barclays’ analyst Dan Levy and Morgan Stanley analyst Adam Jonas downgraded Tesla last week (read: Time to Offload Tesla? Inverse ETFs to Earn Profits).

Short sellers are expecting the S&P 500’s impressive 2023 rally to fizzle out. This is because of the fact that the performance of the S&P 500 wouldn’t be enthusiastic without the contribution of seven big tech companies. Some analysts believe that the AI-fueled rally might soon hit a bump.

Against this backdrop, below, we highlight a few inverse/leveraged ETFs that gained decently last week.

ETFs in Focus

Ultra Bloomberg Natural Gas 2X ETF (BOIL Quick QuoteBOIL - Free Report) – Up 13.8%

The underlying Bloomberg Natural Gas Subindex is intended to reflect the natural gas segment of the commodities market. The index consists of futures contracts on natural gas. Higher demand from heatwave boosted natural gas prices.

Emerging Markets Bear -3X Direxion (EDZ Quick QuoteEDZ - Free Report) – Up 13.7%

The underlying MSCI Emerging Markets Index is a free float-adjusted market capitalization index designed to measure equity market performance in the global emerging markets. Rising rate worries in the United States are negative for emerging market (EM) investing as Fed rate hikes may boost the greenback, which is a negative for EM investing. Higher rates available in the United States also dull the appeal for the higher-yielding but risky EM stocks.

Real Estate Bear -3X Direxion (DRV Quick QuoteDRV - Free Report) – Up 11.7%

The underlying Real Estate Select Sector Index includes securities of companies from the real estate management and development and real estate investment trusts, excluding mortgage REITs. As real estate is a rate-sensitive sector and underperforms in a rising rate environment, DRV had every reason to outperform.

Gold Miners Bear -2X Direxion (DUST Quick QuoteDUST - Free Report) – Up 7.34%

The underlying NYSE Arca Gold Miners Index comprises publicly traded companies that operate globally in both developed and emerging markets, and are involved primarily in the mining for gold and silver. This is another underperformer of rising rate worries. Gold prices fall if U.S. dollar rallies.

Ultrashort Nasdaq Biotechnology -2X ETF (BIS Quick QuoteBIS - Free Report) – Up 5.0%

The underlying NASDAQ Biotechnology Index is a modified capitalization-weighted index that includes securities of The NASDAQ Stock Market listed companies that are classified as either biotechnology or pharmaceutical. Biotechnology stocks, being high-growth in nature, underperforms in a rising rate environment.