Last week was extremely volatile for Wall Street with the S&P 500, the Dow Jones and the Nasdaq losing about 2.5%, 1.7% and 4.1%, respectively. The mayhem was mainly triggered by overvaluation in high-flying tech stocks (which resulted in profit booking) and the likelihood of a delayed rollout of coronavirus vaccine. Nine drug companies pledged that they will not submit vaccine candidates for FDA review until their safety and efficacy is shown in large clinical trials.
In any case, September is historically the worst month of the year for stocks. According to moneychimp.com, a consensus carried out from 1950 to 2019 has revealed that September ended up offering positive returns in 32 years and negative returns in 38 years, with an average return of negative 0.57%, which is worse than any month (read: ETF Strategies to Tackle Volatile September).
On the economic news front, the U.S. economy added 1.371 million jobs in August 2020, decreasing from a downwardly revised 1.734 million in the previous month, and slightly below market forecasts of 1.4 million. Applications for U.S. state unemployment benefits held steady, a sign that said extensive job losses are continuing.
Initial jobless claims in regular state programs were unchanged at 884,000 in the week ended Sep 5, Labor Department data showed. The median estimates in a Bloomberg survey of economists indicted 850,000 initial claims in the latest week (read: Gold ETFs to Get Back Their Glitter As Volatility Flares Up?).
However, manufacturing activities look to be in decent shape as after clocking the highest reading since March 2019 in July, U.S. manufacturing activity accelerated to a nearly two-year high in August due to solid new orders (read: August U.S. Manufacturing Best in 2 Years: 5 Solid ETF Areas).
Against this backdrop, below we highlight a few inverse/leveraged ETFs that topped the market rout successfully last week.
ETFs in Focus
Direxion Daily S&P Oil & Gas Exploration & Production Bear 2x Shares (DRIP) – Up 20.5%
The underlying S&P Oil & Gas Exploration & Production Select Industry Index is designed to measure the performance of a sub industry or group of sub-industries determined based on the Global Industry Classification Standards (GICS). The expense ratio of the fund is 1.07%.
MicroSectors FANG+ Index -3X Inverse Leveraged ETN FNGD – Up 14.4%
The underlying NYSE FANG+ Index includes 10 highly liquid stocks that represent a segment of the technology and consumer discretionary sectors consisting of highly-traded growth stocks of technology and tech-enabled companies. The expense ratio of the fund is 0.95%.
ProShares Ultra Short Oil & Gas (DUG) – Up 13.5%
The underlying Dow Jones U.S. Oil & Gas Index measures the performance of the energy sector of the U.S. equity market. Component companies include oil drilling equipment and services, coal, oil companies-major, oil companies-secondary, pipelines, liquid, solid or gaseous fossil fuel producers and service companies. The expense ratio of the fund is 0.95%.
ProShares UltraPro Short QQQ (SQQQ) – Up 12.6%
The underlying NASDAQ-100 Index includes 100 of the largest domestic and international non-financial companies listed on the NASDAQ Stock Market based on market capitalization. It reflects companies across major industry groups, including computer hardware and software, telecommunications, retail/wholesale trade and biotechnology. The expense ratio of the fund is 0.95%.
Direxion Daily S&P 500 High Beta Bear 3X Shares (HIBS) – Up 11.9%
The underlying S&P 500 High Beta Index selects 100 securities from the S&P 500 Index that have the highest sensitivity to beta over the past 12 months. The expense ratio of the fund is 1.07%.
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Direxion Daily SP Oil Gas Exp. Prod. Bear 2X Shares (DRIP): ETF Research Reports
ProShares UltraShort Oil Gas (DUG): ETF Research Reports
ProShares UltraPro Short QQQ (SQQQ): ETF Research Reports
MicroSectors FANG Index 3X Inverse Leveraged ETNs (FNGD): ETF Research Reports
Direxion Daily SP 500 High Beta Bear 3X Shares (HIBS): ETF Research Reports
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