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Summer Rally Ended? Inverse ETFs to Tap

Sanghamitra Saha
·4 min read

The Dow Jones Industrial Average fell 640 points on Monday, marking its worst day since June (per CNBC), as the summer rally faded and fears of faster interest rate hikes returned to Wall Street.The Fed will likely hike rates by 50 basis points in September amid higher inflation and growing recession worries, according to economists in a Reuters poll.

Traders are now pricing in around a 46.5% chance of a 75-basis-point rate hike in September and a 53.5% chance of a 50-bp increase following recent hawkish remarks from Fed officials.The dollar jumped to a more than one-month high against its rivals.

The Nasdaq, which is high-growth in nature and underperforms in a rising rate environment, dropped 2.6% on Monday. Monday's losses marked the biggest two-day declines for the Nasdaq and the S&P 500 since June. For the S&P 500, Monday indicated the index's largest decline since June 16, the day which marked the market's most recent bottom, per a yahoo finance article.

Last week, the major averages snapped their winning streaks for the first time in four weeks, in fact, snapping their longest weekly winning streak since November 2021. WTI crude oil futures have also been volatile, with crude falling below $87 a barrel on Monday morning. However, news of possible production cuts from Saudi Arabia pushed crude back towards $90 a barrel later on.

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Against this backdrop, below we highlight a few inverse ETFs that could be useful in the current scenario.

ETFs in Focus

ProShares Short S&P500 SH

The ProShares Short S&P500 seeks daily investment results, before fees and expenses, that correspond to the inverse or opposite of the daily performance of the S&P500. The fund charges 88 bps in fees.

Direxion Daily S&P 500 Bear 1x Shares SPDN

The Direxion Daily S&P 500 Bear 1X Shares seeks daily investment results, before fees and expenses, of 100% of the inverse (or opposite) of the performance of the S&P 500 Index. The fund charges 49 bps in fees.

ProShares UltraShort S&P500 SDS

The ProShares UltraShort S&P500 seeks daily investment results, before fees and expenses, that correspond to twice (200%) the inverse (opposite) of the daily performance of the S&P 500. The fund charges 90 bps in fees.

ProShares UltraPro Short S&P500 SPXU

The ProShares UltraPro Short S&P500 seeks daily investment results, before fees and expenses, that correspond to triple (300%) the inverse (opposite) of the daily performance of the S&P 500. The fund charges 90 bps in fees.

Direxion Daily S&P 500 Bear 3X Shares SPXS

The ProShares UltraPro Short S&P500 seeks daily investment results, before fees and expenses, that correspond to triple (300%) the inverse (opposite) of the daily performance of the S&P 500. The fund charges 90 bps in fees.

ProShares Short Russell2000 RWM

The ProShares Short Russell2000 seeks daily investment results, before fees and expenses, that correspond to the inverse (opposite) of the daily performance of the Russell 2000 Index. The fund charges 95 bps in fees.

ProShares Short Dow30 DOG

ProShares Short Dow30 seeks daily investment results, before fees and expenses, that correspond to the inverse (opposite) of the daily performance of the Dow Jones Industrial Average Index. The fund charges 95 bps in fees.

ProShares UltraPro Short QQQ SQQQ

The ProShares UltraPro Short QQQ seeks daily investment results, before fees and expenses, that correspond to triple the inverse of the daily performance of the NASDAQ-100 Index. The fund charges 95 bps in fees.

ProShares Short QQQ PSQ

The ProShares Short QQQ seeks daily investment results, before fees and expenses, that correspond to the inverse of the daily performance of the NASDAQ-100 Index. The fund charges 95 bps in fees.


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ProShares UltraShort S&P500 (SDS): ETF Research Reports
 
ProShares UltraPro Short S&P500 (SPXU): ETF Research Reports
 
ProShares Short S&P500 (SH): ETF Research Reports
 
Proshares Short QQQ (PSQ): ETF Research Reports
 
Proshares Short Dow30 (DOG): ETF Research Reports
 
Direxion Daily S&P 500 Bear 1X Shares (SPDN): ETF Research Reports
 
Direxion Daily S&P 500 Bear 3X Shares (SPXS): ETF Research Reports
 
ProShares UltraPro Short QQQ (SQQQ): ETF Research Reports
 
Proshares Short Russell2000 (RWM): ETF Research Reports
 
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Zacks Investment Research