Wall Street, which has so far been pretty resilient to the coronavirus scare, suffered a bloodbath on Feb 24. This is mainly because of the spike in cases outside China that has fueled possibilities of the virus turning into an acute pandemic.
Iran, Italy and South Korea reported a rise in the number of infected cases over the weekend. As a result, the S&P 500 and the Dow Jones Industrial Average suffered their biggest single-day percentage losses in two years on Feb 24.
The CBOE Volatility Index scaled to the highest level in more than a year. The volatility index gained for three successive days in percentage terms, marking the
seventh-biggest move ever.
The benchmark S&P 500, which makes up for more than 44% of the market capitalization of all global equities, lost $927 billion of value on Feb 24, according to S&P Dow Jones Indices senior analyst Howard Silverblatt,
as quoted on Reuters.
Key U.S. ETFs like
SPDR S&P 500 ETF Trust SPY, SPDR Dow Jones Industrial Average ETF Trust DIA, Invesco QQQ Trust ( QQQ Quick Quote QQQ - Free Report) slumped about 3.3%, 3.5% and 3.9%, respectively, while volatility-measuring product iPath Series B S&P 500 VIX Short-Term Futures ETN ( VXX Quick Quote VXX - Free Report) added about 18.7% (read: Here's Why You Should Bet on Quality ETFs & Stocks).
Against this backdrop, we highlight a few inverse ETF areas that gained considerably on Feb 24 and may be in the spotlight if the sell-off lingers.
Investors can go against the S&P 500 with
ProShares Short S&P500 ETF ( SH Quick Quote SH - Free Report) gaining 3.5% and Direxion Daily S&P 500 Bear 1X Shares ( SPDN Quick Quote SPDN - Free Report) rising 3.3% on Feb 24 (read: Looking to Buy the Dip? Play These Top-Ranked ETFs). Dow Jones
Dow Jones is an extremely trade-sensitive index and thus shares considerable co-relation with China and also with other countries. So, investors intending to play against the tumbling Dow Jones, may tap
ProShares Short Dow 30 ( DOG Quick Quote DOG - Free Report) (up 3.5%), ProShares UltraShort Dow30 (up 7.0%) and DXD ProShares UltraPro Short Dow30 ( SDOW Quick Quote SDOW - Free Report) (up 10.5%). Nasdaq ProShares Short QQQ ( PSQ Quick Quote PSQ - Free Report) (up 3.8%), ProShares UltraShort QQQ QID (up 7.7%) and ProShares UltraPro Short QQQ SQQQ (up 11.6%) are good to play against the Nasdaq. Semiconductor
U.S. semiconductor companies have huge revenue exposure to China, making the sector susceptible to the coronavirus onslaught. While regular semiconductor ETF
iShares PHLX Semiconductor ETF ( SOXX Quick Quote SOXX - Free Report) lost 4.8% on Feb 24, inverse semiconductor ETFs Direxion Daily Semiconductor Bear 3x Shares SOXS gained 14.2% on Feb 24 (read: Forget Coronavirus, Semiconductor ETFs Are a Buy). China
Obviously, businesses are suffering the most in China.
iShares MSCI China ETF ( MCHI Quick Quote MCHI - Free Report) lost 3.3% on Feb 24. So, some of the China-related inverse plays that can be gainful are Direxion Daily CSI 300 China A Share Bear 1X Shares CHAD (up 2.1%), Direxion Daily FTSE China 3x Bear Shares YANG (up 10.1%) and ProShares UltraShort FTSE China 50 FXP (up 6.9%). Emerging Markets
As China is the epicenter of the disease, the impact of the contagion was heavily-felt by emerging markets (EM). The stronger U.S. dollar is also working against the EM bloc.
iShares MSCI Emerging Markets ETF EEM retreated about 3.7% on Feb 24. As a result, inverse EM fund Direxion Daily MSCI Emerging Markets Bear 3X Shares ( EDZ Quick Quote EDZ - Free Report) added 11.5% on Feb 24 and ProShares Short MSCI Emerging Markets ( EUM Quick Quote EUM - Free Report) gained 3.8%. Developed Markets
As the number of cases is rising globally, EAFE (Europe, Australasia and Far East) fund
iShares MSCI EAFE ETF ( EFA Quick Quote EFA - Free Report) lost about 4% on Feb 24. Meanwhile, inverse ETF ProShares Short MSCI EAFE EFZ added 3.9% on the day. Want key ETF info delivered straight to your inbox?
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