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Best Leveraged ETFs of Wall Street's Best Week of 2023
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Wall Street logged the best weekly performance of 2023 last week. The S&P 500 advanced 5.9%, the Dow Jones added 5.1% and the Nasdaq surged 6.6% last week on hopes that the Federal Reserve is done with its rate-hiking campaign. U.S. benchmark treasury yields slumped to 4.57% on Nov 3 from 4.88% recorded at the start of the week.
As expected, the Fed announced on Nov 1, 2023, that it would keep its benchmark interest rate within the range of 5.25% to 5.50%. This marks the highest interest rate level in over two decades. However, the central bank has left the door open for potential future actions as it continues to grapple with the persistent challenge of reining in inflation and steering the economy toward its target of 2% inflation.
But then, the U.S. economy added 150,000 jobs in October, falling short of the 180,000-reading expected, with auto industry strikes acting as a catalyst, the Bureau of Labor Statistics said. The unemployment rate ticked higher to 3.9%. This somber jobs data strengthened bets that the Fed rates have peaked (read: Fed Stays Put: 5 Winning Tech ETFs).
Several technology and fintech earnings came in at upbeat last week with their shares surging massively. These include Shopify (SHOP - Free Report) , Palantir (PLTR - Free Report) , Block (SQ - Free Report) , Roku (ROKU - Free Report) and PayPal (PYPL - Free Report) . Apple (AAPL - Free Report) announced better-than-expected results for its fourth quarter, but an underwhelming outlook for Q1 sent shares falling more than 1% in afternoon trading on Nov 3, 2023.
Notably, third-quarter results from more than 80% of S&P 500 members are already out. Results have once again turned out to be better than expected. Investors should also note that Q3 earnings estimates had hardly budged ahead of the start of the reporting cycle, which makes the outperformance all the more significant. This was another reason for such stellar weekly performance of Wall Street.
We continue to be of the view that while the overall earnings picture isn’t great, it isn’t falling off the cliff either. In fact, Q3 earnings growth is on track to turn positive, which follows three back-to-back quarters of declines.
ETFs in Focus
Against this backdrop, below we highlight a few inverse/leveraged ETFs that soared last week.
The underlying Dow Jones U.S. Select Home Construction Index measures U.S companies in the home construction sector that provide a wide range of products and services related to homebuilding. The fund charges 98 bps in fees.
As the bond yields fell, homebuilding stocks surged as this sector’s strength is inversely proportional to the interest rates. Notably, US new home sales jumped to a 19-month high in September amid falling prices.
The underlying Solactive FANG Innovation Index tracks the stock prices of 15 large capitalization U.S. technology stocks. The fund charges 95 bps in fees.
As the Fed stayed put last week and yields fell, high growth sectors like technology that outperform in a low-rate environment, gained.
The underlying MSCI Mexico IMI 25/50 Index is designed to measure the performance of the large, mid and small-capitalization segments of the Mexican equity market, covering approximately 99% of the free float-adjusted market capitalization in Mexico. The expense ratio of the fund is 1.23%.
The falling U.S. yields boosted emerging market investments. Probably this is why leveraged Mexico ETF surged last week.
The Direxion Daily AMZN Bull 1.5X Shares seek daily investment results, before fees and expenses, of 150% of the performance of the common shares of Amazon.com, Inc. The expense ratio of AMZU is 1.06%.
Amazon recently reported robust third-quarter results, wherein it beat both earnings and revenue estimates. Amazon's cloud computing platform, a record-high Prime Day and a rapidly growing ad sales business drove the results. Plus, Amazon shares surged on prospects of solid holiday season sales.
Consumer discretionary stocks became important ahead of all-important holiday season. Anticipations for the holiday retail sales season are positive, with Mastercard SpendingPulse estimating a 3.7% year-over-year increase between November 1 and December 24, excluding automotive sales. E-commerce and online sales are expected to grow by 6.7% and 2.9%, respectively.
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Best Leveraged ETFs of Wall Street's Best Week of 2023
Wall Street logged the best weekly performance of 2023 last week. The S&P 500 advanced 5.9%, the Dow Jones added 5.1% and the Nasdaq surged 6.6% last week on hopes that the Federal Reserve is done with its rate-hiking campaign. U.S. benchmark treasury yields slumped to 4.57% on Nov 3 from 4.88% recorded at the start of the week.
As expected, the Fed announced on Nov 1, 2023, that it would keep its benchmark interest rate within the range of 5.25% to 5.50%. This marks the highest interest rate level in over two decades. However, the central bank has left the door open for potential future actions as it continues to grapple with the persistent challenge of reining in inflation and steering the economy toward its target of 2% inflation.
But then, the U.S. economy added 150,000 jobs in October, falling short of the 180,000-reading expected, with auto industry strikes acting as a catalyst, the Bureau of Labor Statistics said. The unemployment rate ticked higher to 3.9%. This somber jobs data strengthened bets that the Fed rates have peaked (read: Fed Stays Put: 5 Winning Tech ETFs).
Several technology and fintech earnings came in at upbeat last week with their shares surging massively. These include Shopify (SHOP - Free Report) , Palantir (PLTR - Free Report) , Block (SQ - Free Report) , Roku (ROKU - Free Report) and PayPal (PYPL - Free Report) . Apple (AAPL - Free Report) announced better-than-expected results for its fourth quarter, but an underwhelming outlook for Q1 sent shares falling more than 1% in afternoon trading on Nov 3, 2023.
Notably, third-quarter results from more than 80% of S&P 500 members are already out. Results have once again turned out to be better than expected. Investors should also note that Q3 earnings estimates had hardly budged ahead of the start of the reporting cycle, which makes the outperformance all the more significant. This was another reason for such stellar weekly performance of Wall Street.
We continue to be of the view that while the overall earnings picture isn’t great, it isn’t falling off the cliff either. In fact, Q3 earnings growth is on track to turn positive, which follows three back-to-back quarters of declines.
ETFs in Focus
Against this backdrop, below we highlight a few inverse/leveraged ETFs that soared last week.
Direxion Daily Homebuilders & Supplies Bull 3X Shares (NAIL - Free Report) – Up 28.6%
The underlying Dow Jones U.S. Select Home Construction Index measures U.S companies in the home construction sector that provide a wide range of products and services related to homebuilding. The fund charges 98 bps in fees.
As the bond yields fell, homebuilding stocks surged as this sector’s strength is inversely proportional to the interest rates. Notably, US new home sales jumped to a 19-month high in September amid falling prices.
MicroSectors Solactive FANG & Innovation 3X Leveraged ETN (BULZ - Free Report) – Up 27.1%
The underlying Solactive FANG Innovation Index tracks the stock prices of 15 large capitalization U.S. technology stocks. The fund charges 95 bps in fees.
As the Fed stayed put last week and yields fell, high growth sectors like technology that outperform in a low-rate environment, gained.
Direxion Daily MSCI Mexico Bull 3X Shares (MEXX - Free Report) – Up 25.8%
The underlying MSCI Mexico IMI 25/50 Index is designed to measure the performance of the large, mid and small-capitalization segments of the Mexican equity market, covering approximately 99% of the free float-adjusted market capitalization in Mexico. The expense ratio of the fund is 1.23%.
The falling U.S. yields boosted emerging market investments. Probably this is why leveraged Mexico ETF surged last week.
Direxion Daily AMZN Bull 1.5X Shares ETF (AMZU - Free Report) – Up 23.3%
The Direxion Daily AMZN Bull 1.5X Shares seek daily investment results, before fees and expenses, of 150% of the performance of the common shares of Amazon.com, Inc. The expense ratio of AMZU is 1.06%.
Amazon recently reported robust third-quarter results, wherein it beat both earnings and revenue estimates. Amazon's cloud computing platform, a record-high Prime Day and a rapidly growing ad sales business drove the results. Plus, Amazon shares surged on prospects of solid holiday season sales.
Direxion Daily Consumer Discretionary Bull 3X Shares (WANT - Free Report) – Up 20.9%
The underlying Consumer Discretionary Select Sector Index includes domestic companies from the consumer discretionary sector. The expense ratio of the fund is 1.00% (read: Why You Should Tap Fintech ETFs & Stocks in the Holiday Season).
Consumer discretionary stocks became important ahead of all-important holiday season. Anticipations for the holiday retail sales season are positive, with Mastercard SpendingPulse estimating a 3.7% year-over-year increase between November 1 and December 24, excluding automotive sales. E-commerce and online sales are expected to grow by 6.7% and 2.9%, respectively.