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Wall Street was upbeat last week. The Dow Jones Industrial Average attained a historic landmark, reaching a record high last week, thanks to the Federal Reserve's dovish stance and tone. This marked the end of an amazing week for U.S. stocks, as they closed their longest winning streak since 2017.
Key indexes ended their seventh successive week of gains. The S&P 500 was up 2.5%, the Dow Jones added 2.9%, the Nasdaq jumped 2.9% and the Russell 2000 surged 5.6%.
Shift in Fed’s Tone Sparks Market Rally
The financial markets celebrated the Federal Reserve's change in its outlook during the week. The central bank hinted at a higher number of anticipated rate cuts (by about 75 bps) in 2024 than previously predicted and acknowledged the effectiveness of its anti-inflation campaign (read: Sector ETFs to Gain as Fed Stays Put, Sees Deeper Rate Cuts in 2024).
Meanwhile, the annual inflation rate in the United States slowed to 3.1% in November 2023, the lowest reading in five months, from 3.2% in October and in line with market forecasts. Consumer prices edged 0.1% higher from the previous month, surpassing expectations of a flat reading and remaining unchanged in October (read: 4 Sector ETFs to Win Despite Slowing November Inflation Data).
All these developments fueled a strong rally in U.S. stocks. However, while the market rejoiced over the Fed's stance, some experts highlighted the need for caution. New York Fed President John Williams, in an interview with CNBC, warned that discussions of rate cuts might be "premature," as quoted on Yahoo Finance.
Positive Week for Oil: First Weekly Win Since October
In the world of commodities, oil experienced its first weekly gain since October. West Texas Intermediate futures settled just below $72 per barrel, while Brent crude futures traded at about $77 per barrel. Oil prices had gained by more than 4% over the previous two sessions, primarily due to a softening in the U.S. dollar. United States Oil ETF (USO - Free Report) gained 1.1% last week.
Gold Glittered
Gold prices remained strong throughout the week, finishing above $2,000 per ounce after reaching a record high earlier in the week. SPDR Gold Trust (GLD - Free Report) was up 1.4% last week.
Winning ETFs in Focus
Against this backdrop, below we highlight a few winning inverse/leveraged ETFs of last week.
The U.S. semiconductor space rallied following the announcement of the initial grant under the CHIPS and Science Act of 2022 by the White House, signaling a potential growth opportunity for investors. BAE Systems is set to receive $35 million for upgrading its New Hampshire factory, underscoring the government's focus on chips pivotal to national security, including those in F-35 jets (read: Semiconductor ETFs Surge on First US CHIPS Act Grant).
MAX Auto Industry 3X Leveraged ETN (CARU - Free Report) – Up 27.9%
There was a rally in electric car maker Rivian shares. Rivian — which takes about 19.45% of the underlying index of CARU —jumped more than 19% last week. Other electric-vehicle heavyweights in the index — Tesla (up 4.5%), Lucid Group (up 5.7%) and Nikola Corp (up 27.8%) — also surged last week.
The biotech sector suffered a bit this year due to less availability of funding due to high rates. But the space has staged a rebound lately and is getting a lift from M&A activities. Novel drug launches, low rates, cheaper valuations and easy access to funds should drive the zone in 2024.
MicroSectors U.S. Big Banks Index 3X Leveraged ETNs – Up 24.8%
The latest change in the Fed’s tone could stimulate stocks, especially bank stocks, since experts believe the banking crisis was triggered by a sharp increase in interest rates over the past year. Plus, the Fed rate cuts will likely steepen the yield curve, which is another positive for the space.
The homebuilding sector of the broad stock market has been an area to watch lately, given the decline in mortgage rates. The Fed also indicated the possibility of a 75 bps rate cut in 2024, propelling the demand for the rate-sensitive, homebuilding sector (read: Falling Mortgage Rates Boost Housing ETFs).
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Best Inverse/Leveraged ETFs of Last Week
Wall Street was upbeat last week. The Dow Jones Industrial Average attained a historic landmark, reaching a record high last week, thanks to the Federal Reserve's dovish stance and tone. This marked the end of an amazing week for U.S. stocks, as they closed their longest winning streak since 2017.
Key indexes ended their seventh successive week of gains. The S&P 500 was up 2.5%, the Dow Jones added 2.9%, the Nasdaq jumped 2.9% and the Russell 2000 surged 5.6%.
Shift in Fed’s Tone Sparks Market Rally
The financial markets celebrated the Federal Reserve's change in its outlook during the week. The central bank hinted at a higher number of anticipated rate cuts (by about 75 bps) in 2024 than previously predicted and acknowledged the effectiveness of its anti-inflation campaign (read: Sector ETFs to Gain as Fed Stays Put, Sees Deeper Rate Cuts in 2024).
Meanwhile, the annual inflation rate in the United States slowed to 3.1% in November 2023, the lowest reading in five months, from 3.2% in October and in line with market forecasts. Consumer prices edged 0.1% higher from the previous month, surpassing expectations of a flat reading and remaining unchanged in October (read: 4 Sector ETFs to Win Despite Slowing November Inflation Data).
All these developments fueled a strong rally in U.S. stocks. However, while the market rejoiced over the Fed's stance, some experts highlighted the need for caution. New York Fed President John Williams, in an interview with CNBC, warned that discussions of rate cuts might be "premature," as quoted on Yahoo Finance.
Positive Week for Oil: First Weekly Win Since October
In the world of commodities, oil experienced its first weekly gain since October. West Texas Intermediate futures settled just below $72 per barrel, while Brent crude futures traded at about $77 per barrel. Oil prices had gained by more than 4% over the previous two sessions, primarily due to a softening in the U.S. dollar. United States Oil ETF (USO - Free Report) gained 1.1% last week.
Gold Glittered
Gold prices remained strong throughout the week, finishing above $2,000 per ounce after reaching a record high earlier in the week. SPDR Gold Trust (GLD - Free Report) was up 1.4% last week.
Winning ETFs in Focus
Against this backdrop, below we highlight a few winning inverse/leveraged ETFs of last week.
Direxion Daily Semiconductor Bull 3x Shares (SOXL - Free Report) – Up 29.0%
The U.S. semiconductor space rallied following the announcement of the initial grant under the CHIPS and Science Act of 2022 by the White House, signaling a potential growth opportunity for investors. BAE Systems is set to receive $35 million for upgrading its New Hampshire factory, underscoring the government's focus on chips pivotal to national security, including those in F-35 jets (read: Semiconductor ETFs Surge on First US CHIPS Act Grant).
MAX Auto Industry 3X Leveraged ETN (CARU - Free Report) – Up 27.9%
There was a rally in electric car maker Rivian shares. Rivian — which takes about 19.45% of the underlying index of CARU —jumped more than 19% last week. Other electric-vehicle heavyweights in the index — Tesla (up 4.5%), Lucid Group (up 5.7%) and Nikola Corp (up 27.8%) — also surged last week.
Direxion Daily S&P Biotech Bull 3x Shares (LABU - Free Report) – Up 24.9%
The biotech sector suffered a bit this year due to less availability of funding due to high rates. But the space has staged a rebound lately and is getting a lift from M&A activities. Novel drug launches, low rates, cheaper valuations and easy access to funds should drive the zone in 2024.
MicroSectors U.S. Big Banks Index 3X Leveraged ETNs – Up 24.8%
The latest change in the Fed’s tone could stimulate stocks, especially bank stocks, since experts believe the banking crisis was triggered by a sharp increase in interest rates over the past year. Plus, the Fed rate cuts will likely steepen the yield curve, which is another positive for the space.
Direxion Daily Homebuilders & Supplies Bull 3X Shares (NAIL - Free Report) – Up 23.9%
The homebuilding sector of the broad stock market has been an area to watch lately, given the decline in mortgage rates. The Fed also indicated the possibility of a 75 bps rate cut in 2024, propelling the demand for the rate-sensitive, homebuilding sector (read: Falling Mortgage Rates Boost Housing ETFs).