We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Wall Street logged in strong gains in the second quarter of 2025, reflecting a dramatic rebound from the lows hit in early April. The S&P 500 and Nasdaq Composite posted back-to-back record closing highs to end the quarter, rising 10% and 18%, respectively. The S&P 500 registered its strongest quarterly performance since late 2023, while the Dow Jones Industrial Average notched its best quarterly gain in more than a year. The blue-chip index gained 5%.
We have highlighted the best-performing leveraged equity ETFs that led the market in the second quarter. Direxion Daily Uranium Industry Bull 2X Shares (URAA - Free Report) jumped 140%, followed by gains of 87% for MicroSectors FANG+ 3 Leveraged ETNs (FNGU - Free Report) , 84% for ProShares Ultra Semiconductors (USD - Free Report) , 74% for Direxion Daily Crypto Industry Bull 2X Shares (LMBO - Free Report) and 69% for Direxion Daily Aerospace & Defense Bull 3X Shares (DFEN - Free Report) .
These funds seek to register big gains in a short span and will continue their strong trend, at least in the near term, provided the sentiments remain bullish. Leveraged ETFs provide multiple exposures (2X or 3X) to the daily performance of the underlying index. These funds employ various investment strategies, such as swaps, futures contracts and other derivative instruments, to accomplish their objectives.
Here's a closer look at the key drivers that fueled the rally:
AI-Led Tech Surge
Artificial intelligence remained the dominant theme throughout the second quarter. Heavyweights like NVIDIA (NVDA), Microsoft (MSFT) and Alphabet (AAPL) continued to post strong earnings, driven by soaring demand for AI chips, cloud computing and enterprise integration of generative AI tools. The broader tech sector, especially semiconductors, surged as optimism around productivity gains and capital investment in AI infrastructure intensified (read: 5 Stocks Driving Nasdaq 100 ETF Higher in 2025).
Easing Trade Tensions
After months of market unease triggered by escalating tariffs and global trade frictions, signs of de-escalation provided a major boost. President Trump's temporary suspension of proposed tariffs in late April alleviated investor fears over supply chain disruptions and import cost inflation. This shift not only stabilized multinational stocks but also reignited confidence in industrial and consumer sectors.
Benign Economic Data
Economic indicators released throughout the quarter painted a picture of steady, albeit moderated, growth. Inflation showed signs of cooling, with core PCE and CPI readings edging lower. Consumer spending remained resilient, supported by a strong labor market and rising real wages. Meanwhile, GDP growth for Q1 was revised upward, further supporting the soft-landing narrative.
Federal Reserve’s Dovish Tilt
Federal Reserve Chair Jerome Powell signaled a more accommodative stance during his June meeting, hinting that interest rate cuts could arrive later in the year. The central bank’s shift from a hawkish to dovish tone reassured investors that monetary policy would support the recovery.
Resumption of LNG Exports and Energy Stability
A rebound in U.S. liquefied natural gas (LNG) exports following spring maintenance at key terminals helped stabilize energy markets. This development, combined with stable oil prices and stronger demand from Europe and Asia, benefited energy stocks and reduced fears of an energy shock that could put pressure on global growth (read: Here's Why Energy ETFs Outperformed Last Week: Will the Rally Last?).
Investor Sentiment and Momentum Buying
After a rocky Q1, investor sentiment turned decisively positive in May and June. Record inflows into ETFs and mutual funds, particularly in large-cap and tech-focused instruments, helped sustain the rally. Momentum buying, short covering, and the fear of missing out among institutional investors further accelerated the upward movement in stock prices.
Bottom Line
As a caveat, investors should note that the leveraged products are extremely volatile and suitable only for short-term traders. Additionally, the daily rebalancing, when combined with leverage, may make these products deviate significantly from the expected long-term performance figures (see: all the Leveraged Equity ETFs here).
Yet, for ETF investors who are bullish on these sectors in the near term, any of the above-mentioned products can be an interesting choice. A near-term long could be intriguing for those with high risk tolerance and a belief that the trend is a friend in this corner of the investing world.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Best Leveraged ETFs of the Second Quarter of 2025
Wall Street logged in strong gains in the second quarter of 2025, reflecting a dramatic rebound from the lows hit in early April. The S&P 500 and Nasdaq Composite posted back-to-back record closing highs to end the quarter, rising 10% and 18%, respectively. The S&P 500 registered its strongest quarterly performance since late 2023, while the Dow Jones Industrial Average notched its best quarterly gain in more than a year. The blue-chip index gained 5%.
We have highlighted the best-performing leveraged equity ETFs that led the market in the second quarter. Direxion Daily Uranium Industry Bull 2X Shares (URAA - Free Report) jumped 140%, followed by gains of 87% for MicroSectors FANG+ 3 Leveraged ETNs (FNGU - Free Report) , 84% for ProShares Ultra Semiconductors (USD - Free Report) , 74% for Direxion Daily Crypto Industry Bull 2X Shares (LMBO - Free Report) and 69% for Direxion Daily Aerospace & Defense Bull 3X Shares (DFEN - Free Report) .
These funds seek to register big gains in a short span and will continue their strong trend, at least in the near term, provided the sentiments remain bullish. Leveraged ETFs provide multiple exposures (2X or 3X) to the daily performance of the underlying index. These funds employ various investment strategies, such as swaps, futures contracts and other derivative instruments, to accomplish their objectives.
Here's a closer look at the key drivers that fueled the rally:
AI-Led Tech Surge
Artificial intelligence remained the dominant theme throughout the second quarter. Heavyweights like NVIDIA (NVDA), Microsoft (MSFT) and Alphabet (AAPL) continued to post strong earnings, driven by soaring demand for AI chips, cloud computing and enterprise integration of generative AI tools. The broader tech sector, especially semiconductors, surged as optimism around productivity gains and capital investment in AI infrastructure intensified (read: 5 Stocks Driving Nasdaq 100 ETF Higher in 2025).
Easing Trade Tensions
After months of market unease triggered by escalating tariffs and global trade frictions, signs of de-escalation provided a major boost. President Trump's temporary suspension of proposed tariffs in late April alleviated investor fears over supply chain disruptions and import cost inflation. This shift not only stabilized multinational stocks but also reignited confidence in industrial and consumer sectors.
Benign Economic Data
Economic indicators released throughout the quarter painted a picture of steady, albeit moderated, growth. Inflation showed signs of cooling, with core PCE and CPI readings edging lower. Consumer spending remained resilient, supported by a strong labor market and rising real wages. Meanwhile, GDP growth for Q1 was revised upward, further supporting the soft-landing narrative.
Federal Reserve’s Dovish Tilt
Federal Reserve Chair Jerome Powell signaled a more accommodative stance during his June meeting, hinting that interest rate cuts could arrive later in the year. The central bank’s shift from a hawkish to dovish tone reassured investors that monetary policy would support the recovery.
Resumption of LNG Exports and Energy Stability
A rebound in U.S. liquefied natural gas (LNG) exports following spring maintenance at key terminals helped stabilize energy markets. This development, combined with stable oil prices and stronger demand from Europe and Asia, benefited energy stocks and reduced fears of an energy shock that could put pressure on global growth (read: Here's Why Energy ETFs Outperformed Last Week: Will the Rally Last?).
Investor Sentiment and Momentum Buying
After a rocky Q1, investor sentiment turned decisively positive in May and June. Record inflows into ETFs and mutual funds, particularly in large-cap and tech-focused instruments, helped sustain the rally. Momentum buying, short covering, and the fear of missing out among institutional investors further accelerated the upward movement in stock prices.
Bottom Line
As a caveat, investors should note that the leveraged products are extremely volatile and suitable only for short-term traders. Additionally, the daily rebalancing, when combined with leverage, may make these products deviate significantly from the expected long-term performance figures (see: all the Leveraged Equity ETFs here).
Yet, for ETF investors who are bullish on these sectors in the near term, any of the above-mentioned products can be an interesting choice. A near-term long could be intriguing for those with high risk tolerance and a belief that the trend is a friend in this corner of the investing world.