Wall Street was downbeat last week, with losses seen in all major indexes. The S&P 500 (down 2.41%), the Dow Jones (down 2.14%), the Nasdaq Composite (down 2.8%) and the Russel 2000 (down 2.6%) shed gains by around 2%.
Inflation data for April was released last week. The world’s largest economy continues to struggle with the persistently-high inflation levels. Per the latest Labor Department report, the Consumer Price Index (CPI) jumped 8.3% year over year in April, surpassing the already high Dow Jones estimate of an 8.1% rise. The metric, however, compared favorably with the 8.5% rise (the maximum since December 1981) in March.
April’s U.S. inflation print strengthened expectations that the Fed will continue its aggressive rate hike. The Fed hiked the rate in March by 25 bps and in May by 50 bps (which is the highest magnitude in two decades). Markets are pricing in another 190-basis-point rate hike in 2022.
Concerns that tighter monetary policies to tame surging inflation will slow down global economic growth have in turn weighed on the risk sentiment and driven investors toward the safe-haven currency greenback.
The dollar stands at a two-decade high against the Japanese yen and a more than five-year high against the euro, after rising 13% and 8%, respectively, against the currencies this year. SPDR Gold Shares GLD was off 2.5% last week as gold is priced in the greenback.
Companies pointing to currency headwinds in their latest earnings reports include Coca-Cola Co, Procter & Gamble and Philip Morris International Inc. Analysts cut their overall forecast for S&P 500 second-quarter profit growth to 5.6% from 6.8% at the start of April owing to the current headwinds, per a Reuters article.
As far as benchmark U.S. treasury yields are concerned, the week started with 3.05% yield and ended at 2.93%. Yields declined steadily in the first four days of the week to 2.84% and then spurted back to 2.93% on Friday.
This happened because investors sought bonds’ safety amid renewed recessionary concerns. And due to a decline in the long-term bond yields, financial stocks were heavily battered last week, offering a considerable rise to the inverse financial ETFs.
Against this backdrop, below, we highlight a few winning inverse/leveraged ETF areas of last week.
ETFs in Focus
Inverse/Leveraged Gold Miners
Microsectors Gold Miners -3X ETN GDXD – Up 31.9%
Gold Miners Bear 2X Direxion DUST – Up 21.2%
Junior Gold Mine Bear 3X Direxion JDST – Up 21.2%
Inverse/Leveraged Financials
Microsectors -3X U.S. Big Banks ETN BNKD – Up 13.3%
Financial Bear 3X Direxion FAZ – Up 9.2%
Ultrashort Financials ETF SKF – Up 6.1%
Inverse Leveraged Real Estate
Real Estate Bear 3X Direxion DRV – Up 10%
Inverse/Leveraged Energy
S&P Oil & Gas Expl Bear 3X Direxion DRIP – Up 8.8%
Inverse Leveraged Technology
Technology Bear 3X Direxion TECS – Up 8.2%
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SPDR Gold Shares (GLD): ETF Research Reports
Direxion Daily Gold Miners Index Bear 2X Shares (DUST): ETF Research Reports
Direxion Daily Junior Gold Miners Index Bear 2X Shares (JDST): ETF Research Reports
Direxion Daily Financial Bear 3x Shares (FAZ): ETF Research Reports
ProShares UltraShort Financials (SKF): ETF Research Reports
Direxion Daily Real Estate Bear 3X Shares (DRV): ETF Research Reports
Direxion Daily S&P Oil & Gas Exp. & Prod. Bear 2X Shares (DRIP): ETF Research Reports
Direxion Daily Technology Bear 3X Shares (TECS): ETF Research Reports
MicroSectors U.S. Big Banks Index 3X Inverse Leveraged ETNs (BNKD): ETF Research Reports
MicroSectors Gold Miners 3X Inverse Leveraged ETNs (GDXD): ETF Research Reports
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Zacks Investment Research
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
