ETFs
3 Best Inverse/Leveraged ETF Areas from Last Week
Wall Street was moderately optimistic last week. The S&P 500 gained 1.6%, the Dow Jones lost 0.5% and the Nasdaq soared 3.2%. The tech rally primarily pushed the S&P 500 and Nasdaq higher. Weaker inflation data mainly triggered bets that the Fed would cut rates sooner than expected.
These expectations themselves have, in turn, driven down bond yields. The week began at 4.47% of benchmark U.S. Treasury yields and closed the week at 4.20%. Falling benchmark Treasury yields last week led to gains in growth sectors like technology.
Refreshing inflation
Investors should note that the annual inflation rate in the United States slowed to 3.3% in May 2024, the lowest in three months, from 3.4% in April and below the forecast of 3.4 %. Core CPI came in at 3.4%, below expectations of 3.5%. This is the lowest rate since April 2021.
Wholesale inflation unexpectedly fell 0.2% last month, while economists surveyed by Dow Jones had expected a 0.1% increase. This follows a consumer price index remaining stable on a monthly basis in May. This is the biggest drop in producer prices since October (read: 3 Undervalued Growth ETF Winners With More Room to Run).
Fed stays put, possibility of rate cut in September?
The Fed chose to maintain its benchmark interest rate in a range between 5.25% and 5.50%, a level it has maintained since July 2023. The Fed, however, revised its rate cut forecasts. While previously forecasting three rate cuts for the year, the Fed reduced its estimate to just one due to persistent inflation.
The odds of a September rate cut have increased following the release of the CPI report, but the decision depends on continued improvement in inflation data. There is currently a 61.1% probability of a 25 basis point rate cut in September, up from 50.7% recorded on May 16, 2024, according to the CME FedWatch tool. The Fed maintained its unemployment and GDP outlook for the year, while raising its neutral rate forecast.
A pessimistic development?
The University of Michigan consumer survey found that consumer confidence fell to 65.6 in June from 69.1 in May. This reading is also below the Dow Jones estimate of 71.5.
With this backdrop, we highlight some winning inverse/leveraged ETFs from the past week below.
Focus on ETFs
Mining NVIDIA ETFs
Direxion Daily NVDA Bull 2X shares NVDU – Up 18.8%
T-Rex 2X Long NVIDIA Daily Target NVDX ETF – Up 18.6%
NVIDIA is up 173.8% this year and 9.5% last week due to the continued rise of artificial intelligence (AI). Even after this stock’s huge rally, most analysts are still betting big on it.
Exploited semiconductors
ProShares Ultra Semiconductors USD – Up 17.3%
The story continues
Direxion Daily Semiconductor Bull 3x shares SOXL – up 15.9%
The rise of generative AI programs has created high demand for advanced chips used in AI data centers. Tech giants like Meta, Microsoft, Tesla, and Google are mostly buying as many NVIDIA chips as possible. Investors are closely watching Intel, AMD and NVIDIA for long-term updates on AI chip developments (read: Chip ETFs Focus on Next-Generation AI Product Launches).
Apple exploited
Direxion Daily AAPL Bull 2X shares AAPU – Up 15.5%
GraniteShares 2x Long AAPL Daily ETF AAPB – Up 15.4%
Apple AAPL gained 7.7% last week. Apple has regained its position as the most valuable company in the world, surpassing Microsoft MSFT. This achievement marks a key milestone, driven by Apple’s recent announcement of its generative AI initiative called “Apple Intelligence” (read: ETFs in the Spotlight as Apple Reclaims Most Valuable Stock).
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Apple Inc. (AAPL): Free Stock Analysis Report
Microsoft Corporation (MSFT): Free Stock Analysis Report
Direxion Daily Semiconductor Bull 3X Stock (SOXL): ETF Research Reports
ProShares Ultra Semiconductors (USD): ETF Research Reports
GraniteShares 2x Long AAPL Daily ETF (AAPB): ETF Research Reports
Direxion Daily AAPL Bull 2X Stock (AAPU): ETF Research Reports
Direxion Daily NVDA Bull 2X Stock (NVDU): ETF Research Reports
T-REX 2X Long NVIDIA Daily Target ETF (NVDX): ETF Research Reports