Yahoo Finance 3 Best Inverse/Leveraged ETF Areas of Last Week
Wall Street was moderately upbeat last week. The S&P 500 gained 1.6%, the Dow Jones lost 0.5% and the Nasdaq soared 3.2%. The tech rally mainly pushed up the S&P 500 and the Nasdaq. Softer inflation data mainly triggered the bets over a sooner-than-expected Fed rate cut.
The expectation itself, in turn, dragged down bond yields. The week started at 4.47% of the benchmark U.S. treasury yields and closed the week at 4.20%. The decline in benchmark treasury yields last week led to gains in growth sectors like technology.
Cooling 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, compared to 3.4% in April and below the forecast of 3.4%. Core CPI hit 3.4%, below expectations of 3.5%. It marked the lowest rate since April 2021.
Wholesale inflation unexpectedly ticked down 0.2% last month, while economists polled by Dow Jones expected the gauge to increase 0.1%. This followed a consumer price index reading that was flat on a monthly basis in May. It was the biggest drop in producer prices since October (read: 3 Undervalued Growth ETF Winners With More Room to Run).
Fed Stays Put, September Rate Cut Possibility?
The Fed opted to maintain its benchmark interest rate within the range of 5.25% to 5.50%, a level it has maintained since July 2023. However, the Fed has revised its rate cut predictions. While previously predicting three rate cuts for the year, the Fed scaled back its estimate to just one due to sticky inflation.
The odds of a rate cut in September rose following the CPI report, but the decision hinges on continued improvement in inflation data. There is currently a 61.1% probability of a 25-bp rate cut in September, up from 50.7% recorded on May 16, 2024, per CME FedWatch Tool. The Fed retained its unemployment and GDP outlook for the year, while raising its neutral rate forecast.
Any Downbeat Development?
The University of Michigan’s Survey of Consumers revealed that consumer sentiment fell to 65.6 in June from 69.1 in May. This reading also came below the 71.5 Dow Jones estimate.
Against this backdrop, below we highlight a few winning inverse/leveraged ETFs of last week.
ETFs in Focus
Leveraged NVIDIA ETFs
Direxion Daily NVDA Bull 2X Shares NVDU – Up 18.8%
T-Rex 2X Long NVIDIA Daily Target ETF NVDX – Up 18.6%
NVIDIA is up 173.8% this year and added 9.5% last week due to the ongoing boom in artificial intelligence (AI). Even after the huge rally in this stock, most analysts continue to bet big on it.
Leveraged Semiconductors
ProShares Ultra Semiconductors USD – Up 17.3%
Direxion Daily Semiconductor Bull 3x Shares SOXL – Up 15.9%
The surge in generative AI programs has created a 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 keenly watching Intel, AMD and NVIDIA for long-term updates on AI chip developments (read: Chip ETFs in Focus on New Generation AI Product Launches).
Leveraged Apple
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 world’s most valuable company, topping Microsoft MSFT. This achievement marks a key milestone, driven by Apple's recent announcement related to its generative AI initiative called “Apple Intelligence” (read: ETFs in Focus as Apple Reclaims Most Valuable Title).
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Apple Inc. (AAPL) : Free Stock Analysis Report
Microsoft Corporation (MSFT) : Free Stock Analysis Report
Direxion Daily Semiconductor Bull 3X Shares (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 Shares (AAPU): ETF Research Reports
Direxion Daily NVDA Bull 2X Shares (NVDU): ETF Research Reports
T-REX 2X Long NVIDIA Daily Target ETF (NVDX): ETF Research Reports
