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Wall Street delivered mixed performances last week due to rising rates. While the S&P 500 (up 0.8%) and the Nasdaq (up 2.3%) managed to eke out gains, the Dow Jones (down 0.5%) and the Russell 2000 (down slumped last week. The tech rally powered by the upbeat Nvidia (NVDA - Free Report) earnings boosted the Nasdaq and favored the S&P 500.
Federal Reserve Chair Jerome Powell indicated Friday at the Jackson Hole Economic Symposium that “additional evidence of persistently above-trend growth could put further progress on inflation at risk and could warrant further tightening of monetary policy."
Powell also indicated that prices remain "too high" and the central bank has not warded off further tightening. Currently, there is an 80.5% likelihood that the Federal Reserve will maintain its benchmark interest rate within the 5.25% to 5.50% range during the upcoming September meeting, according to the CME FedWatch Tool. Markets are pricing in a 55% chance of a Fed rate hike at its early-November policy meeting (read: Time for High-Quality ETFs as Slowdown Worries Mount?).
Rate hike or not, one thing is evident from the latest Fed meetings that interest rates are likely to stay elevated for a longer period time. No rate cuts are expected in the near term. The benchmark U.S. treasury yields started the week at 4.34%, dropped to 4.19% on Aug 23 only to shoot higher to 4.25% on Aug 25. The one-year U.S. treasury yield jumped to 5.44% on Aug 25 from 5.35% recorded on Aug 23. No wonder, the broader market came under pressure.
Meanwhile, corporate earnings releases in the United States appear to be in good shape. All eyes were glued to Nvidia earnings last week to get cues of the future course AI euphoria. And Nvidia didn’t disappoint investors. The chipmaker came up with blowout earnings results and offered an upbeat outlook too. Several other tech companies like Zoom (ZM - Free Report) and Baidu (BIDU - Free Report) also impressed investors last week with earnings results (read: Zoom Gains on Upbeat Earnings & View: ETFs in Focus).
Against this backdrop, below, we highlight a few best-performing inverse/leveraged ETF areas of last week.
GraniteShares 1.25x Long Tesla Daily ETF ((TSL - Free Report) ) – Up 13.3%
Tesla shares jumped 7.7% last week. According to reports on Friday, Wedbush analyst Dan Ives noted that the EV leader is poised to generate $20 billion by 2030 from its supercharger network partnerships with Ford (F) and General Motors (GM), per investors.com. The analyst also sees the company to benefit from "the government's plan to reduce carbon emissions to zero by 2050" as well as growing orders for the Cybertruck ahead of its launch.
Silver bullion ETF SLV added 4.1% last week. Silver is more of an industrial metal even though both gold and silver are regarded as safe-haven assets. With the U.S. economic growth on right track and rate hike worries creating a volatility in the market silver prices had every reason to surge.
Direxion Daily Junior Gold Miners Index Bull 2x Shares ((JNUG - Free Report) ) – Up 8.3%
Due to market doldrums gold bullion ETF GLD added 1% last week. Since mining stocks act as leveraged plays of the underlying metal, leveraged gold mining ETFs jumped.
Leveraged Nvidia
GraniteShares 1.5x Long NVDA Daily ETF ((NVDL - Free Report) ) – Up 8.9%
Nvidia’s Q2 earnings of $2.70 per share smashed the Zacks Consensus Estimate of $2.09 per share. Earnings were up year over year by an astounding 429%. Revenues of $13.51 billion (up 101% year over year) were even more staggering, easily sweeping past the $11.17 billion in the Zacks consensus. Not only this, Nvidia said that there will be 170% sales jump in the third quarter thanks to the demand for AI chips (read: Nvidia Earnings Show AI Boom Is Here to Stay: ETFs in Focus).
Leveraged Banks
MicroSectors U.S. Big Banks Index -3X Inverse Leveraged ETNs ((BNKD - Free Report) ) – Up 6.9%
A flattening yield curve and deteriorating health of the U.S. banks have boosted this inverse-leveraged bank ETF. S&P has downgraded five U.S. banks and put two others on notice because of a "tough" high interest rate business environment.
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5 Best Inverse/Leveraged ETF Areas of Last Week
Wall Street delivered mixed performances last week due to rising rates. While the S&P 500 (up 0.8%) and the Nasdaq (up 2.3%) managed to eke out gains, the Dow Jones (down 0.5%) and the Russell 2000 (down slumped last week. The tech rally powered by the upbeat Nvidia (NVDA - Free Report) earnings boosted the Nasdaq and favored the S&P 500.
Federal Reserve Chair Jerome Powell indicated Friday at the Jackson Hole Economic Symposium that “additional evidence of persistently above-trend growth could put further progress on inflation at risk and could warrant further tightening of monetary policy."
Powell also indicated that prices remain "too high" and the central bank has not warded off further tightening. Currently, there is an 80.5% likelihood that the Federal Reserve will maintain its benchmark interest rate within the 5.25% to 5.50% range during the upcoming September meeting, according to the CME FedWatch Tool. Markets are pricing in a 55% chance of a Fed rate hike at its early-November policy meeting (read: Time for High-Quality ETFs as Slowdown Worries Mount?).
Rate hike or not, one thing is evident from the latest Fed meetings that interest rates are likely to stay elevated for a longer period time. No rate cuts are expected in the near term. The benchmark U.S. treasury yields started the week at 4.34%, dropped to 4.19% on Aug 23 only to shoot higher to 4.25% on Aug 25. The one-year U.S. treasury yield jumped to 5.44% on Aug 25 from 5.35% recorded on Aug 23. No wonder, the broader market came under pressure.
Meanwhile, corporate earnings releases in the United States appear to be in good shape. All eyes were glued to Nvidia earnings last week to get cues of the future course AI euphoria. And Nvidia didn’t disappoint investors. The chipmaker came up with blowout earnings results and offered an upbeat outlook too. Several other tech companies like Zoom (ZM - Free Report) and Baidu (BIDU - Free Report) also impressed investors last week with earnings results (read: Zoom Gains on Upbeat Earnings & View: ETFs in Focus).
Against this backdrop, below, we highlight a few best-performing inverse/leveraged ETF areas of last week.
ETF Areas in Focus
Leveraged Tesla
Direxion Daily TSLA Bull 1.5X Shares ETF ((TSLL - Free Report) ) – Up 15.9%
GraniteShares 1.25x Long Tesla Daily ETF ((TSL - Free Report) ) – Up 13.3%
Tesla shares jumped 7.7% last week. According to reports on Friday, Wedbush analyst Dan Ives noted that the EV leader is poised to generate $20 billion by 2030 from its supercharger network partnerships with Ford (F) and General Motors (GM), per investors.com. The analyst also sees the company to benefit from "the government's plan to reduce carbon emissions to zero by 2050" as well as growing orders for the Cybertruck ahead of its launch.
Leveraged Silver
ProShares Ultra Silver ((AGQ - Free Report) ) – Up 13.3%
Silver bullion ETF SLV added 4.1% last week. Silver is more of an industrial metal even though both gold and silver are regarded as safe-haven assets. With the U.S. economic growth on right track and rate hike worries creating a volatility in the market silver prices had every reason to surge.
Leveraged Gold Miners
MicroSectors Gold Miners 3X Leveraged ETN ((GDXU - Free Report) ) – Up 10.1%
Direxion Daily Junior Gold Miners Index Bull 2x Shares ((JNUG - Free Report) ) – Up 8.3%
Due to market doldrums gold bullion ETF GLD added 1% last week. Since mining stocks act as leveraged plays of the underlying metal, leveraged gold mining ETFs jumped.
Leveraged Nvidia
GraniteShares 1.5x Long NVDA Daily ETF ((NVDL - Free Report) ) – Up 8.9%
Nvidia’s Q2 earnings of $2.70 per share smashed the Zacks Consensus Estimate of $2.09 per share. Earnings were up year over year by an astounding 429%. Revenues of $13.51 billion (up 101% year over year) were even more staggering, easily sweeping past the $11.17 billion in the Zacks consensus. Not only this, Nvidia said that there will be 170% sales jump in the third quarter thanks to the demand for AI chips (read: Nvidia Earnings Show AI Boom Is Here to Stay: ETFs in Focus).
Leveraged Banks
MicroSectors U.S. Big Banks Index -3X Inverse Leveraged ETNs ((BNKD - Free Report) ) – Up 6.9%
A flattening yield curve and deteriorating health of the U.S. banks have boosted this inverse-leveraged bank ETF. S&P has downgraded five U.S. banks and put two others on notice because of a "tough" high interest rate business environment.