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MARKETS LIVE BLOG:

STOCKS TREAD WATER AFTER S&P 500'S RECORD CLOSE

U.S. private payrolls growth slows in June, according to ADP Employment report

Best Inverse/Leveraged ETFs of Last Week Up At Least 15%

Sanghamitra Saha
·4 min read

Wall Street was upbeat last week. Each of the key equity gadgets — the S&P 500 (up 1.5%), the Dow Jones (up 2%), the Nasdaq Composite (up 0.7%) and the Russell 2000 (up 2.3%) — gained last week. While the beginning of the week was marked by a bear-market rally, Wall Street faltered in the middle of the week on higher oil prices and chances of further steep Fed rate hike due to upbeat jobs data.

Oil prices increased last week as OPEC+ producers agreed deep output cuts, seeking to spur a recovery in crude prices despite repeated calls from U.S. President Joe Biden’s administration for the group to pump more to lower fuel prices and contain global inflation (read: Oil ETFs Up on Steep OPEC+ Output Cuts).

The U.S. economy added 263,000 jobs in September 2022, the least since April of 2021 but higher than market forecasts of 250,000, per tradingeconomics. The reading indicated a decline from an average of 439K in the first eight months of the year, as high inflation and interest rates started to weigh on the economy.

Still, the number hints at a tight labor market with employment about 500,000 higher than its pre-pandemic level. Unemployment rate dropped to 3.5%. Economists expected unemployment to hold at 3.7%, per consensus estimates compiled by Bloomberg, quoted on Yahoo Finance.

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The benchmark U.S. treasury yield jumped to 3.89% on Oct 7, 2022 from 3.67% at the start of the week. Yield dropped to 3.62% in the middle of the week.

Against this backdrop, below we highlight a few inverse/leveraged ETF areas that have gained at least 20%.

Cannabis

Advisorshares Msos 2X Daily ETF MSOX – Up 65.5%

Shares in cannabis companies traded in an extremely volatile manner last week, resulting in steeper-than-normal ups and downs. Most cannabis stocks jumped after U.S. President Joe Biden sent his first of a thread of tweets about work he was going to do related to cannabis.

President Biden announced pardons for cannabis convictions. The prospects for the passage of SAFE banking had increased following the announcement. However, shares could not hold on to the gains as they slumped to close out the week.

Oil & Energy

Microsectors U.S. Big Oil Index 3X ETN NRGU – Up 43.7%

Microsectors Oil & Gas Exp. & Prod. 3X Leveraged OILU – Up 41.9%

Ultra Bloomberg Crude Oil ETF UCO – Up 30.1%

The Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, decided to cut production targets by about two million barrels per day from November. Energy analysts had mostly expected the group to cut output in the range of 500,000 barrels and two million barrels, as quoted on CNBC. The announcement led to a rise in oil and energy ETFs last week.

Brazil

Brazil Bull 3X Direxion BRZU – Up 19.1%

Ultra MSCI Brazil Capped ETF UBR – Up 19%

Brazil markets recorded its best day since 2020 last week as Bolsonaro outperformed polls in the first round of general presidential election which lowered concerns about massive changes in existing economic policies.

Homebuilders

Homebuilders & Suppliers Bull 3X Direxion NAIL – Up 15.4%

Homebuilding stocks gained last week as rates eased to start the week. U.S. home prices are falling at the fastest monthly pace since the Great Recession. However, though home price growth has cooled over the past month, prices still remain at an elevated level. Declining rates and increasing affordability (which should not affect homebuilders’ margins much) showed chances of resulting in higher home sales (read: 5 Reasons Why Housing ETFs Could Gain in Q4).


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ProShares Ultra Bloomberg Crude Oil (UCO): ETF Research Reports
 
Direxion Daily MSCI Brazil Bull 2X Shares (BRZU): ETF Research Reports
 
Direxion Daily Homebuilders & Supplies Bull 3X Shares (NAIL): ETF Research Reports
 
MicroSectors Oil & Gas E&P 3X Leveraged ETNs (OILU): ETF Research Reports
 
ProShares Ultra MSCI Brazil Capped (UBR): ETF Research Reports
 
MicroSectors U.S. Big Oil Index 3X Leveraged ETN (NRGU): ETF Research Reports
 
AdvisorShares MSOS 2x Daily ETF (MSOX): ETF Research Reports
 
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Zacks Investment Research