Wall Street was downbeat last week with the S&P 500, the Dow Jones, the Nasdaq Composite and the Russell 2000 losing 4.8%, 4.1%, 5.5% and 4.5%, respectively. Hot inflation data, chances of an even hawkish Fed, global growth concerns and geopolitical tensions related to Russia and Ukraine led to the crash. Additionally, the declines came as traders weighed an ominous caution from FedEx about the global economy.
FedEx (FDX) was in the spotlight on Friday after the company removed its full-year guidance and delivered messaging around its earnings outlook, also stating that macroeconomic trends have "significantly worsened," as quoted on Yahoo Finance. Per FedEx, “global volumes declined as macroeconomic trends significantly worsened later in the quarter, both internationally and in the U.S.”
Morgan Stanley’s lead U.S. equity strategist Michael Wilson has said that while the first half of the year was disturbed by inflationary pressures and hawkish Federal Reserve policy, the remainder will be troubled by slowing growth and weakness in earnings, the Yahoo Finance article quoted.
At the beginning of the week, August inflation data came in higher-than-expected. The annual inflation rate in the United States eased for two months in a row to 8.3% in August of 2022, the lowest in four months, from 8.5% in July but above market forecasts of 8.1%. Meanwhile, core CPI, which eliminates volatile energy and food prices, increased 6.3% on a year, the most since March, and up markedly from 5.9% hit in both June and July (read: 5 Sector ETFs to Win from August Inflation Data).
The CME Group revealed that there is an 82% chance of a 0.75% rate hike this week and a 18% probability of a 1% rate hike (at the time of writing). A month ago, this data showed a 40%-60% chances between a 75-basis-point and a 50-basis-point rate hike.
No wonder, such rising rate concerns weighed on high growth sectors like technology. Tech stocks were beaten down badly last week. Against this backdrop, below we highlight a few winning inverse/leveraged ETFs of last week.
ETFs in Focus
Microsectors Fang & Innovation -3X ETN (BERZ) – Up 24.3%
Technology Bear 3X Direxion (TECS) – Up 18.8%
DJ Internet Bear 3X Direxion (WEBS) – Up 17.9%
Ultrapro Short QQQ ETF (SQQQ) – Up 17.4%
Inverse Real Estate
Real Estate Bear 3X Direxion (DRV) – Up 20.04%
S&P Biotech Bear 3X Direxion (LABD) – Up 15.2%
Ultrashort Basic Materials ETF (SMN) – Up 15.2%
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Direxion Daily S&P Biotech Bear 3X Shares (LABD): ETF Research Reports
Direxion Daily Real Estate Bear 3X Shares (DRV): ETF Research Reports
Direxion Daily Technology Bear 3X Shares (TECS): ETF Research Reports
ProShares UltraShort Basic Materials (SMN): ETF Research Reports
MicroSectors FANG & Innovation 3X Inverse Leveraged ETN (BERZ): ETF Research Reports
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