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Best Inverse/Leveraged ETFs of Last Week

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Wall Street delivered a downbeat show last week with the S&P 500 and Nasdaq logging worst weeks since March due to rising rate worries. The S&P 5800 (down 2.9%), the Dow Jones (down 1.9%), the Nasdaq (down 3.6%) and the Russell 2000 (down 3.8%) – all key indexes slumped last week as rates are likely to remain higher for longer. Concern also emerged around a government shutdown, which could hurt consumer confidence and slow down the economy.

 The benchmark U.S. treasury yield started the week at 4.32%, hit a high of 4.49% on Sep 21 and closed out the week at 4.44%. Meanwhile, the two-year rate touched its highest level since 2006. The Federal Reserve, as expected, kept interest rates steady at a 22-year high in the range of 5.25% to 5.5% but signaled one more hike this year.

Recent indicators suggest that economic activity has been expanding at a solid pace. Job gains have slowed in recent months but remain strong and the unemployment rate has remained low. But though inflation is easing, it remains elevated and is above the Fed’s 2% target (read: High-Dividend ETFs: Winners Amid Fed's Higher-For-Longer Rate Cues).

IPO-Packed Week

The U.S. IPO market, which has been in the doldrums for nearly two years, seems to be springing back to life. Two IPOs grabbed investor attention last week. These include grocery delivery company Instacart (CART) and software vendor Klaviyo (KVYO). While Instacart jumped 12% on Nasdaq debut, Klaviyo gained 9% on NYSE debut (read: Instacart Pops 12% On Nasdaq Debut: 6 ETFs in Focus).

Inside Key Corporate Events

IP-based networking company Cisco Systems (CSCO) has announced its acquisition of cybersecurity heavyweight, Splunk (SPLK), for a staggering $28 billion. This huge deal marks Cisco's most significant move to bolster its software business and leverage the surge in artificial intelligence. The deal is anticipated to close by the end of the third quarter in 2024 (read: ETFs in Focus as Cisco Acquires Splunk in $28 Billion AI-Deal).

After the closing bell on Sep 20, transport bellwether FedEx (FDX - Free Report) delivered mixed first-quarter fiscal 2024 results. The courier company topped earnings estimates but missed on revenues. It provided upbeat guidance for the fiscal year despite the ongoing demand weakness. Following the results, FDX shares jumped 5.8% in after-market trade (read: ETFs to Gain on FedEx Q1 Earnings Beat).

Against this backdrop, below we highlight a few winning inverse/leveraged ETFs of last week.

ETFs in Focus

MAX Auto Industry -3x Inverse Leveraged ETN (CARD - Free Report) – Up 24.1%

With approximately 400,000 active members across the United States, Canada, and Puerto Rico, United Auto Worker’s (UAW) strike against the largest automotive manufacturers in the United States, the “Detroit Three” – namely General Motors (GM), Ford (F) and Stellantis (STLA), resulted into a crash in auto stocks (read: UAW Strike: How Tesla and EV ETFs Stand to Gain).

2x Long VIX Futures ETF (UVIX - Free Report) – Up 21.7%

As the broader market slumped last week, volatility ETF VXX surged 11.3%. No wonder, leveraged volatility ETF, which tracks the Long VIX Futures Index expresses the daily performance of a theoretical portfolio of first and second month VIX futures contracts that are rolled daily, jumped last week.

MicroSectors Travel -3x Inverse Leveraged ETN (FLYD - Free Report) – Up 19.5%

The underlying Cambria Foreign Shareholder Yield ETF utilizes a quantitative approach to invest in foreign developed equities with high cash distribution characteristics. The fund charges 59 bps in fees.

Direxion Daily S&P Biotech Bear 3x Shares (LABD - Free Report) – Up 18.2%

The underlying S&P Biotechnology Select Industry Index is designed to measure the performance of a sub-industry or group of sub-industries determined based on the Global Industry Classification Standards (GICS). The expense ratio is 1.09%.

GraniteShares 1.5x Short TSLA Daily ETF (TSDD - Free Report) – Up 17.7%

Tesla stock slumped 9.7% last week. The GraniteShares 1.5x Short TSLA Daily ETF seeks daily investment results, before fees and expenses, of negative 1.5 times the daily percentage change of the common stock of Tesla Inc.

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