After two-months of stupendous rally, Wall Street fell apart on Jun 11 as another 1.542 million Americans claimed unemployment benefits amid the COVID-19 crisis, signs of rising coronavirus cases with easing lockdowns are visible and the Fed stated its cautious outlook for the economy. Key U.S. indexes fell in the range of 5% to 6.9% on Jun 11.
Wall Street ripped higher lately on the unprecedented U.S. central bank and government stimulus. Many have hoped for a V-shaped recovery, especially after a surprisingly upbeat May jobs report and some better-than-expected economic data points.
However, in the latest policy meeting, Federal Reserve Chair Jerome Powell poured some cold water on the extra-euphoric Wall Street bulls, saying “millions” of people will not able to resume work for some time because of the aftershocks to businesses from the COVID-19 crisis.
The Fed now expects the U.S. unemployment rate to hit 9.3% this year, dropping to 6.5% in 2021 and declining further to 5.5% in 2022. The unemployment rate in May dropped to 13.3% from 14.7% in April. Before the pandemic, the U.S. unemployment rate was hovering near the 50-year lows of around 3.6%.
The Fed sees American GDP falling by 6.5% in 2020 before rising by 5.0% in 2021 and 3.5% in 2022. The projections and Fed comments hint that the coronavirus-led economic crisis is far from over. In short, there is a “disconnect between Main Street and Wall Street,” per analysts.
Moreover, coronavirus cases have been rising in key states such as Texas, California and Arizona. Texas alone reported 2,504 new infections on Jun 10, marking the highest one-day total since the pandemic started.
However, no downbeat environment is awful for all securities available in the market. Yesterday’s market crash too benefited some investing zones. Below we highlight a few of them that gained on the market crash on Jun 11. These areas could prove to be gainful, if we see similar kind of market downturns in the coming days.
iPath Series B S&P 500 VIX Short-Term Futures ETN (VXX - Free Report) – Up 33.6% on Jun 11
The underlying S&P 500 VIX Short-Term Futures Index Total Return offers exposure to a daily rolling long position in the first and second month VIX futures contracts and reflects views of the future direction of the VIX index at the time of expiration of the VIX futures contracts comprising the Index. It charges 89 bps in fees.
ProShares UltraShort S&P500 (SDS - Free Report) – Up 11.59%
The underlying ProShares UltraShort S&P500 seeks daily investment results, before fees and expenses, that correspond to twice (200%) the inverse (opposite) of the daily performance of the S&P 500. The fund charges 89 bps in fees.
AdvisorShares Ranger Equity Bear ETF (HDGE - Free Report) – Up 7.58%
This ETF is active and does not track a benchmark. The AdvisorShares Ranger Equity Bear ETF seeks capital appreciation through short sales of domestically traded equity securities. Its expense ratio is 3.12% per year.
AGFiQ U.S. Market Neutral Anti-Beta Fund (BTAL - Free Report) – Up 6.62%
The underlying Dow Jones U.S. Thematic Market Neutral Anti-Beta Index is a long / short market neutral index that is dollar-neutral. The expense ratio of the fund is 2.11% annually (read: Top & Flop ETFs at Half-Way Q2).
PIMCO 25+ Year Zero Coupon U.S. Treasury Index Exchange-Traded Fund (ZROZ - Free Report) – Up 2.46%
The underlying ICE BofAML Long US Treasury Principal STRIPS Index comprises of long maturity Separate Trading of Registered Interest & Principal of Securities representing the final principal payment of U.S. Treasury bonds. It charges 15 bps in fees (read: Why You Should Buy Treasury ETFs Now).
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