Wall Street was upbeat last week with the S&P 500, the Dow Jones and the Nasdaq adding about 3.5%, 2.6% and 6%, respectively. Some upbeat earnings, gradual opening of economies, improvement in the virus outlook, developments in COVID-19 treatments and vaccines, oil price rally and massive stimulus from the Fed and the U.S. government aided the rally.
Against this backdrop, below we highlight a few leveraged ETF areas that won big time last week.
Mexico – Direxion Daily MSCI Mexico Bull 3X Shares Direxion Daily MSCI Mexico Bull 3 (MEXX - Free Report) – Up 30.1%
Mexico is an oil-rich country. Initially, Mexico was hit hard by the historic oil slump in April caused by coronavirus-led lockdowns. However, crude oil June contract gained 0.8% past week, at the time of writing as reopening of economies raised hopes of oil demand recovery and benefited the fund. Moreover, Mexico enacted an emergency rate cut in late April taking it to a three-year low. This is another near-term positive for the fund.
Biotech – Direxion Daily S&P Biotech Bull 3X Shares (LABU - Free Report) – Up 29.9%
Healthcare and biotech stocks and ETFs soared higher amid the ongoing medical emergency. Large pharma and biotech companies are working on medicines, vaccines and testing kits. Most recently, Gilead (GILD - Free Report) indicated that the trial for coronavirus treatment Remdesivir has met its initial goal. And Remdesivir received the FDA nod for emergency use for coronavirus as an experimental drug. Moderna Inc. (MRNA - Free Report) , which is developing experimental vaccines, said it has entered into an agreement to manufacture a billion doses a year. This optimism kept Wall Street charged up.
Big Oil – Micro Sectors U.S. Big Oil Index 3X Leveraged ETNs (NRGU - Free Report) – Up 29.9%
The product was a beneficiary of the oil price rally. The underlying Solactive MicroSectors U.S. Big Oil Index is an equal-dollar weighted index that provides exposure to the 10 largest U.S. energy and oil companies. Companies on the index are ConocoPhillips, Chevron Corp, EOG Resources, Hess, Marathon Petroleum, Occidental Petroleum, Phillips 66, Pioneer Natural Resources, Valero Energy and Exxon Mobil.
Internet – Direxion Daily Dow Jones Internet Bull 3X Shares (WEBL - Free Report) – Up 25.9%
Internet ETFs have shown strength to a large extent. The rapid emergence of cutting-edge technology, including cloud computing, big data, IoT, VR, AI, has been driving the sector. The growing adoption of 5G technology — the next wireless revolution — is opening up further opportunities. Internet stocks have all the more reason to stay safe as the space has less to do with human contact (read: PayPal Surges on Upbeat Q2 Outlook: ETFs to Benefit).
Homebuilder– Direxion Daily Homebuilders & Supplies Bull 3X Shares (NAIL - Free Report) – Up 25.2%
Record-low rates, lower inventory, and still-elevated price levels have kept the homebuilding space steady. Home prices are likely to be much better-positioned than during the Great Recession.
Semiconductor– Direxion Daily Semiconductor Bull 3X Shares (SOXL - Free Report) – Up 25.1%
The semiconductor industry, which is a relatively value-centric corner of the high-growth technology space, has been steady amid coronavirus-related stock market volatility. In the near term, higher smartphone sales and 5G boom should give a boost to the area (read: What Awaits Semiconductor ETFs in Post-Lockdown World?)
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