Best Inverse/Leveraged ETFs of Last Week

Wall Street delivered a downbeat performance last week. The S&P 500 (down 0.13%), the Dow Jones (down 0.02%) and the Nasdaq (down 0.7%) – all three key U.S. equity gauges were in the red. The hot inflation reading and the chances of higher-for-longer interest rates weighed on the broader market. 

The consumer price index, a broad measure of goods and services costs, rose 0.4% sequentially in February and 3.2% year over year. The monthly gain was in line with expectations, but the annual rate was slightly ahead of the 3.1% forecast from the Dow Jones consensus.

No wonder the benchmark 10-year U.S. treasury yield jumped to 4.31% on Mar 15, 2024, from 4.10% recorded on Mar 11, 2024. The two-year U.S. treasury yield, too, jumped  by 19 bps to 4.72% during this timeframe.

The Fed is due to meet on Mar 20, 2024, and the rates are likely to remain the same this month. If this was not enough, U.S. Treasury Secretary Janet Yellen said that it's “unlikely” that interest rates will return to the pre-pandemic levels.

The key selling season for homebuyers – Spring – may freeze out this year as higher mortgage rates, lack of affordability and higher home prices may retard would-be buyers from entering the housing market. Mortgage rates have largely been on the rise this year, peaking around 7% in mid-February.

Against this backdrop, below we highlight a few winning inverse/leveraged ETFs of last week.

ETFs in Focus

YieldMax MSTR Option Income Strategy ETF (MSTY) – Up 18%

The YieldMax MSTR Option Income Strategy ETF seeks current income and exposure to the share price of the common stock of MicroStrategy Incorporated, subject to a limit on potential investment gains. The expense ratio of the fund is 0.99%.

MicroStrategy is a leading worldwide provider of business intelligence software. MicroStrategy has announced the pricing of a private offering of $525 million aggregate principal amount of 0.875% convertible senior notes due 2031. The company intends to use the proceeds from the sale of the notes to acquire additional Bitcoin and for general corporate purposes.

AdvisorShares MSOS 2x Daily ETF (MSOX) – Up 15.7%

Cannabis stocks recorded solid gains last week after a prominent hedge fund manager suggested that regulators will soon reclassify marijuana as a less dangerous drug. Notably, pot stocks have been in a solid shape since last few weeks. Germany took a huge step toward the broad legalization in Europe. Germany could become the largest country in Europe to legalize cannabis in 2024. 

German lawmakers approved a government plan to liberalize rules on cannabis, paving the way for the country to decriminalize limited amounts of marijuana and allow members of “cannabis clubs” to buy it for recreational purposes, and the move would take effect from April 1.

MicroSectors U.S. Big Oil Index 3X Leveraged ETN (NRGU) – Up 15.3%

The oil rally continued last week after the IEA warned that supply would lag this year and U.S. stockpiles fell. WTI crude futures traded above $81 per barrel last week and touched their highest levels since November, while Brent crude futures rose to above $85. This explains the surge in NRGU.

GraniteShares 2x Short TSLA Daily ETF (TSDD) – Up 13.8%

Tesla shares fell 6.7% last week due to the ongoing pressure in the electric vehicle (EV) space. It is currently the worst performer in the S&P 500 this year, down nearly 32% since January. Due to incessant price cuts, Tesla is expected to face margin pressure. Plus, competition from Chinese EV makers is intensifying.

Direxion Daily S&P Biotech Bear 3x Shares (LABD) – Up 13.4%

After facing difficulties last year, biotech companies are seeing a turnaround driven by attractive valuations and AI-led advances in medicine. Cheaper valuation, improving M&A landscape and regulatory approval wins have also made this area red-hot lately. New drug approvals reached an all-time high in 2023.  From pharmaceutical giants developing life-saving drugs to companies advancing medical technologies, the healthcare sector offers a breadth of investment opportunities.

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Direxion Daily S&P Biotech Bear 3X Shares (LABD): 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

GraniteShares 2x Short TSLA Daily ETF (TSDD): ETF Research Reports

YieldMax MSTR Option Income Strategy ETF (MSTY): ETF Research Reports

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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