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After a string of all-time high closes in July, the S&P 500 and Nasdaq ended the month with gains of approximately 2.3% and 3.7%, respectively. The advance marked the third consecutive monthly gain for the S&P 500 and the fourth straight for the Nasdaq. Meanwhile, the Dow finished the month largely unchanged.
The market's surge was widespread, with gains across sectors, suggesting investor confidence in the underlying fundamentals of the economy. We have highlighted a bunch of the best-performing leveraged equity ETFs from different corners of the market that gained in double digits in July. These include Direxion Daily Aerospace & Defense Bull 3X Shares (DFEN - Free Report) , ProShares Ultra Semiconductors (USD - Free Report) , Direxion Daily Utilities Bull 3X Shares (UTSL - Free Report) and VistaShares Animal Spirits Daily 2X Strategy ETF (WILD - 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.
There are various factors behind the rally in the stocks last month. Here are those:
Strong Big Tech & AI Earnings
Tech titans like Microsoft (MSFT - Free Report) and Meta Platforms (META - Free Report) fueled optimism. Meta forecasted robust Q3 ad revenues amid AI investment, while Microsoft reported strong Azure growth and outlined a $30???billion capital spend. Nasdaq's momentum was particularly buoyed by AI???driven earnings strength (read: Meta, Microsoft Spark $500B Rally in AI Leaders and ETFs).
Trade Deal Progress & Easing Tariff Fears
Markets cheered emerging deals with the EU and Japan, tempering tariff anxieties. This improved sentiment across broader equities and helped the S&P???500 hit fresh record highs.
Rising Consumer Confidence
Americans are feeling optimistic about the economy as consumer sentiment hit a five-month high in July. U.S. consumer sentiment surged to its strongest level in five months in July, offering a glimmer of optimism amid lingering policy uncertainty. According to preliminary data from the University of Michigan’s Surveys of Consumers, the Consumer Sentiment Index jumped to 61.8, up from 60.7 in June (read: ETFs to Consider as Consumer Sentiment Improves in July).
Steady Fed
In the July FOMC meeting, the Fed kept interest rates steady at 4.25-4.50%. Fed Chair???Powell’s cautious, data???dependent tone suggested that rate cuts could come later in 2025, as long as inflation doesn’t surge. That helped sustain investor confidence.
Risks Ahead
Market confidence faltered at the start of August in the wake of escalating trade tensions and signs of a cooling labor market. The S&P 500 dropped 1.6%, marking its worst single-day performance since May, while the Nasdaq Composite Index tumbled 2.2% on Friday.
The sell-off followed a disappointing July jobs report, which showed the economy added just 73,000 jobs, well below the 104,000 expected. Adding to concerns, job gains for the prior two months were revised sharply lower, and the unemployment rate ticked up to 4.2%. The markets were further shaken by President Trump's sweeping tariff hikes unveiled late Thursday. The executive order slapped higher tariffs on dozens of countries, including key partners like Taiwan, India, and Canada, with most levies ranging between 15% and 40%, though the baseline remains 10%. Tariffs on Canadian imports will jump to 35%, effective immediately, while others are scheduled to take effect in a week.
Bottom Line
As a caveat, investors should note that 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 the stock market 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.
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4 Leveraged ETFs With Double-Digit Gains in July
After a string of all-time high closes in July, the S&P 500 and Nasdaq ended the month with gains of approximately 2.3% and 3.7%, respectively. The advance marked the third consecutive monthly gain for the S&P 500 and the fourth straight for the Nasdaq. Meanwhile, the Dow finished the month largely unchanged.
The market's surge was widespread, with gains across sectors, suggesting investor confidence in the underlying fundamentals of the economy. We have highlighted a bunch of the best-performing leveraged equity ETFs from different corners of the market that gained in double digits in July. These include Direxion Daily Aerospace & Defense Bull 3X Shares (DFEN - Free Report) , ProShares Ultra Semiconductors (USD - Free Report) , Direxion Daily Utilities Bull 3X Shares (UTSL - Free Report) and VistaShares Animal Spirits Daily 2X Strategy ETF (WILD - 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.
There are various factors behind the rally in the stocks last month. Here are those:
Strong Big Tech & AI Earnings
Tech titans like Microsoft (MSFT - Free Report) and Meta Platforms (META - Free Report) fueled optimism. Meta forecasted robust Q3 ad revenues amid AI investment, while Microsoft reported strong Azure growth and outlined a $30???billion capital spend. Nasdaq's momentum was particularly buoyed by AI???driven earnings strength (read: Meta, Microsoft Spark $500B Rally in AI Leaders and ETFs).
Trade Deal Progress & Easing Tariff Fears
Markets cheered emerging deals with the EU and Japan, tempering tariff anxieties. This improved sentiment across broader equities and helped the S&P???500 hit fresh record highs.
Rising Consumer Confidence
Americans are feeling optimistic about the economy as consumer sentiment hit a five-month high in July. U.S. consumer sentiment surged to its strongest level in five months in July, offering a glimmer of optimism amid lingering policy uncertainty. According to preliminary data from the University of Michigan’s Surveys of Consumers, the Consumer Sentiment Index jumped to 61.8, up from 60.7 in June (read: ETFs to Consider as Consumer Sentiment Improves in July).
Steady Fed
In the July FOMC meeting, the Fed kept interest rates steady at 4.25-4.50%. Fed Chair???Powell’s cautious, data???dependent tone suggested that rate cuts could come later in 2025, as long as inflation doesn’t surge. That helped sustain investor confidence.
Risks Ahead
Market confidence faltered at the start of August in the wake of escalating trade tensions and signs of a cooling labor market. The S&P 500 dropped 1.6%, marking its worst single-day performance since May, while the Nasdaq Composite Index tumbled 2.2% on Friday.
The sell-off followed a disappointing July jobs report, which showed the economy added just 73,000 jobs, well below the 104,000 expected. Adding to concerns, job gains for the prior two months were revised sharply lower, and the unemployment rate ticked up to 4.2%. The markets were further shaken by President Trump's sweeping tariff hikes unveiled late Thursday. The executive order slapped higher tariffs on dozens of countries, including key partners like Taiwan, India, and Canada, with most levies ranging between 15% and 40%, though the baseline remains 10%. Tariffs on Canadian imports will jump to 35%, effective immediately, while others are scheduled to take effect in a week.
Bottom Line
As a caveat, investors should note that 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 the stock market 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.