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Best Leveraged ETFs of Last Week

Wall Street was upbeat last week. The Dow Jones, the S&P 500 and the Nasdaq Composite hit record highs for the first time in almost two months. The S&P 500 added about 1.5%, the Dow Jones advanced more than 1.2%, the Nasdaq jumped 2.1% and the Russell 2000 gained 1.7%. The rally came after the release of weaker-than-expected inflation data, which raised hopes of a sooner-than-expected Fed rate cut.

In April, inflationary pressures showed signs of easing, with the Consumer Price Index (CPI) on a "core" basis rising 3.6% year over year, in line with expectations. This marked a cooling from the 3.8% increase observed in March. Monthly core price increases also aligned with expectations of 0.3%, down from 0.4% in the previous three months.

If this was not enough, retail sales in April remained unchanged, contrasting with a 0.6% increase in March and defying the 0.4% rise anticipated by economists. This unexpected stagnation in consumer spending indicates a possible shift in consumer behavior amid persistent inflation and higher interest rates. Investors are hopeful that these somber economic data points might lead the Fed to reconsider its tough stance on monetary policy in the near term.

We would like to note that following the CPI release, market expectations regarding rate cuts shifted slightly, with a modest increase in the probability of a rate cut in September, according to the CME FedWatch Tool. Following the release of data, there was a 52.7% chance of a 25-bps worth of September rate cut, up from a 50.5% chance a day earlier (read: 3 Sector ETFs to Play on Renewed Fed Rate Cut Hopes).

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The U.S. benchmark treasury yield was 4.42% on May 17, 2024, down from 4.48% recorded at the start of the week. Against this backdrop, below, we highlight the winning leveraged ETFs of last week.

ETFs in Focus

ProShares Ultra Bloomberg Natural Gas BOIL – Up 25.9%

Natural gas price has been soaring lately. Supply disruptions, such as the prolonged outage at Freeport LNG and maintenance at Gorgon, along with geopolitical risks, have contributed to the recent rally.

ProShares Ultra Silver AGQ – Up 24.5%

The strength of the greenback lessened last week on renewed Fed rate cut hopes. Since bullion is priced in the greenback, silver prices rallied. Moreover, mining stocks often act as leveraged plays of the underlying metal, giving a lift to this leveraged silver mining ETF last week.

2x Bitcoin Strategy ETF BITX – Up 21.6%

Bitcoin rallied last week. While it was recovering, other crypto tokens, including Solana, Cardano, Polkadot, and Avalanche, also showed strength. The increasing bets of near-term Fed rate cuts brought back risk-on trade sentiments and boosted the fund.

GraniteShares 2x Long BABA Daily ETF BABX – Up 20.8%

Chinese e-commerce giant Alibaba announced a modest increase in annual revenues last week. Michael Burry’s investment firm doubled down on its bets on JD.com Inc and Alibaba Group Holding Ltd. in the first quarter as Chinese equities bottomed out. This has boosted investors’ appetite for Alibaba stock.

Direxion Daily FTSE China Bull 3X Shares YINN – Up 17.1%

Despite the Chinese economy’s poor performance last year, global investors are returning to equities this year. Compelling valuation, market restructuring, billions in buybacks, the AI boom and its impact on various industries have lately been boosting the space. Foreign carmakers are joining hands with Chinese companies, operating in artificial intelligence and other smart car technology.

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ProShares Ultra Silver (AGQ): ETF Research Reports

ProShares Ultra Bloomberg Natural Gas (BOIL): ETF Research Reports

Direxion Daily FTSE China Bull 3X Shares (YINN): ETF Research Reports

GraniteShares 2x Long BABA Daily ETF (BABX): ETF Research Reports

2x Bitcoin Strategy ETF (BITX): ETF Research Reports

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Zacks Investment Research