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Leveraged ETFs rallied as Salesforce and Okta shares jumped on strong results.
Inverse ETFs gained as AXT and D-Wave stocks fell sharply last week.
A stronger-than-expected Fed stance and jobs data could drive September volatility.
U.S. stocks finished lower on Friday but posted weekly gains as investors weighed Kevin Warsh’s caution on inflation and the possibility of a September rate hike. For the week, the S&P 500 gained 0.5%, the Nasdaq rose 0.9% and the Dow advanced 0.5%, marking its first weekly gain in three weeks.
Warsh Raises Rate-Hike Concerns
Speaking at the Federal Reserve’s annual Jackson Hole symposium, Warsh indicated that recent inflation readings have not provided enough evidence of a sustained slowdown in underlying price pressures, as quoted on CNBC.
His comments prompted traders to sharply increase expectations for a September rate hike. Fed funds futures showed a 57% probability of a hike, up from 39.9% a week ago (at the time of writing), according to CME Group’s FedWatch tool.
Short-term Treasury yields initially moved higher following the speech, reflecting growing expectations for tighter monetary policy, while longer-dated yields were relatively steady.
AI Stocks Face a New Test
Technology stocks rebounded strongly during the week thanks to NVIDIA’s revenue guidance, but the rally could face a tougher test as investors reassess valuations against a potentially more hawkish Fed (read: NVIDIA Raises the Bar on AI Growth: AI ETFs to Win).
AI remains a major focus for investors, with market participants continuing to position around companies benefiting from AI spending and infrastructure. However, higher interest-rate expectations could create additional pressure on growth-oriented technology stocks. VanEck Semiconductor ETF (SMH - Free Report) displayed a seesaw trading pattern in the week and posted a dip of 0.1%.
However, Fed Chair Kevin Warsh said, “we should not indulge a regime in which market participants are looking primarily to the Fed for their next trade,” as quoted on CNBC.
Leveraged ETF Winners
Below we highlight a few winning leveraged ETFs of last week.
Leverage Shares 2X Long CRM Daily ETF (CRMG - Free Report) – Up 44.6%
Shares of Salesforce (CRM) skyrocketed last week after the company reported a beat on second-quarter earnings and expanded its partnership with Anthropic. Salesforce shares surged 22.8% last week, helping the leveraged fund surge.
Leverage Shares 2X Long OKTA Daily ETF (OKTG - Free Report) – Up 42.9%
Okta Inc. (OKTA - Free Report) shares rose 24.3% last week as the identity software provider surpassed Wall Street’s fiscal second-quarter estimates. During the quarter, the company made its Okta for AI Agents solution, designed to manage and secure AI agents, available to all customers.
New products contributed 30% of total bookings, while Okta closed dozens of AI-related deals, including a multimillion-dollar agreement with a healthcare company.
Tradr 2X Short AXTI Daily ETF (AXTQ - Free Report) – Up 37.0%
AXT Inc. (AXTI - Free Report) shares lost 12.6% last week. The stock has recently pulled back due to profit-taking, high valuation concerns, and changing market dynamics in the indium phosphide supply chain.
Defiance Daily Target 2x Short QBTS ETF (QBTZ - Free Report) – Up 34.6%
D-Wave Quantum Inc (QBTS - Free Report) shares fell over 14% last week.Leadership changes like CFO John Markovich's surprise retirement and wider financial losses led to the decline in the stock.
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Best Leveraged ETFs of Last Week
Key Takeaways
U.S. stocks finished lower on Friday but posted weekly gains as investors weighed Kevin Warsh’s caution on inflation and the possibility of a September rate hike. For the week, the S&P 500 gained 0.5%, the Nasdaq rose 0.9% and the Dow advanced 0.5%, marking its first weekly gain in three weeks.
Warsh Raises Rate-Hike Concerns
Speaking at the Federal Reserve’s annual Jackson Hole symposium, Warsh indicated that recent inflation readings have not provided enough evidence of a sustained slowdown in underlying price pressures, as quoted on CNBC.
His comments prompted traders to sharply increase expectations for a September rate hike. Fed funds futures showed a 57% probability of a hike, up from 39.9% a week ago (at the time of writing), according to CME Group’s FedWatch tool.
Short-term Treasury yields initially moved higher following the speech, reflecting growing expectations for tighter monetary policy, while longer-dated yields were relatively steady.
AI Stocks Face a New Test
Technology stocks rebounded strongly during the week thanks to NVIDIA’s revenue guidance, but the rally could face a tougher test as investors reassess valuations against a potentially more hawkish Fed (read: NVIDIA Raises the Bar on AI Growth: AI ETFs to Win).
AI remains a major focus for investors, with market participants continuing to position around companies benefiting from AI spending and infrastructure. However, higher interest-rate expectations could create additional pressure on growth-oriented technology stocks. VanEck Semiconductor ETF (SMH - Free Report) displayed a seesaw trading pattern in the week and posted a dip of 0.1%.
However, Fed Chair Kevin Warsh said, “we should not indulge a regime in which market participants are looking primarily to the Fed for their next trade,” as quoted on CNBC.
Leveraged ETF Winners
Below we highlight a few winning leveraged ETFs of last week.
Leverage Shares 2X Long CRM Daily ETF (CRMG - Free Report) – Up 44.6%
Shares of Salesforce (CRM) skyrocketed last week after the company reported a beat on second-quarter earnings and expanded its partnership with Anthropic. Salesforce shares surged 22.8% last week, helping the leveraged fund surge.
Leverage Shares 2X Long OKTA Daily ETF (OKTG - Free Report) – Up 42.9%
Okta Inc. (OKTA - Free Report) shares rose 24.3% last week as the identity software provider surpassed Wall Street’s fiscal second-quarter estimates. During the quarter, the company made its Okta for AI Agents solution, designed to manage and secure AI agents, available to all customers.
New products contributed 30% of total bookings, while Okta closed dozens of AI-related deals, including a multimillion-dollar agreement with a healthcare company.
Tradr 2X Short AXTI Daily ETF (AXTQ - Free Report) – Up 37.0%
AXT Inc. (AXTI - Free Report) shares lost 12.6% last week. The stock has recently pulled back due to profit-taking, high valuation concerns, and changing market dynamics in the indium phosphide supply chain.
Defiance Daily Target 2x Short QBTS ETF (QBTZ - Free Report) – Up 34.6%
D-Wave Quantum Inc (QBTS - Free Report) shares fell over 14% last week.Leadership changes like CFO John Markovich's surprise retirement and wider financial losses led to the decline in the stock.