The bloodbath that started in Wall Street on Nov 26 on news of the Omicron variant of COVID-19 stretched last week also. We saw some positive days last week (as the S&P 500 logged its best day in seven weeks), but overall, it was downbeat for Wall Street.The S&P 500 (down 1.2%), the Dow Jones (down 0.9%), the Nasdaq Composite (down 0.9%) and the Russell 2000 (down 3.9%) were all in the red on a weekly basis (read: S&P 500 Notches Best Day in Seven Weeks: 5 ETF Winners).
Apart from the Omicron woes, inflationary pressure continued to bother markets. The Fed also indicated speeding up of QE tapering in the coming days probably to rein in inflation. Powell said he sees the unwinding to conclude “a few months” sooner than expected, a move that might lead to faster-than-expected interest rate hikes.
As far as the key economic data are concerned, the manufacturing sector recorded growth while the jobs data came in downbeat. Nonfarm payrolls increased by 210,000 in November following a gain of 546,000 the previous month. The number fell shy of Wall Street expectations of 573,000, per CNBC.
Against this backdrop, below we highlight a few inverse-leveraged ETFs that were up handsomely last week. Gainers were all inverse ETFs as investors bet against the regular fund in a falling market.
ETFs in Focus
Ultrashort Bloomberg Natural Gas ETF KOLD – Up 58.3%
The underlying Bloomberg Natural Gas Subindex is intended to reflect the natural gas segment of the commodities market. The index consists of futures contracts on natural gas.
U.S. spot gas futures prices dropped as seasonal demand faltered. According to a short-term forecast from S&P Global Platts Analytics, heating demand should bottom out at 28.5 Bcf on Dec 2 and track close to the five-year low for the next week at about 35.9 Bcf/d, per a SPGlobal article.
Etfmg 2X Daily Inverse Alternative Harvest ETF MJIN – Up 24.5%
The underlying Prime Alternative Harvest Index provides a benchmark for investors interested in benefiting from the global cannabis industry, including both medicinal and recreational legalization initiatives.
Cannabis stocks nosedived as legalization efforts at the federal level in the United States seemed to waver. Notably, marijuana stocks had jumped before on legalization hopes. Now, loss of hope is eating away all the previous gains.
DJ Internet Bear 3X Direxion WEBS – Up 21.4%
The underlying Dow Jones Internet Composite Index includes only companies whose primary focus is Internet related.
Tech stocks tumbled late last week as the President Biden said he doesn’t want lockdowns and won’t expand vaccine mandates to fight COVID this winter. DocuSign (NASDAQ:DOCU), Etsy (NASDAQ:ETSY), DoorDash and Zoom — all stay-at-home stocks and one-time COVID-19 winners — slumped on dimming possibilities of further lockdowns.
Also, the Fed hinted at faster policy tightening, which pointed to a rise in rates in the future. This also goes against high-growth tech investing.
Direxion Daily Cloud Computing Bear 2X Shares CLDS – Up 20.6%
The underlying Indxx USA Cloud Computing Index includes domestic companies that deliver cloud computing infrastructure, platforms, or services.
Cloud computing has also been a winning proposition of the COVID-led lockdowns. With cues of the United States being done with further lockdown, cloud computing also followed the suit of tech slump last week.
S&P Biotech Bear 3X Direxion LABD – Up 18.1%
The underlying S&P Biotechnology Select Industry Index is designed to measure the performance of a sub-industry or group of sub-industries determined on the Global Industry Classification Standards (GICS).
Biotech stocks staged a rally initially on Omicron news. However, Moderna (NASDAQ:MRNA) CEO cautioned about a “material drop” in vaccine efficacy against Omicron. Moderna (MRNA) shares slumped 17.4% past week, leading to a crash in several biotech funds. Another vaccine maker Pfizer’s (PFE (NYSE:PFE)) shares dropped 8% last week.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.
Get it free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Direxion Daily S&P Biotech Bear 3X Shares (LABD): ETF Research Reports
ProShares UltraShort Bloomberg Natural Gas (KOLD): ETF Research Reports
Direxion Daily Dow Jones Internet Bear 3X Shares (WEBS): ETF Research Reports
Direxion Daily Cloud Computing Bear 2X Shares (CLDS): ETF Research Reports
ETFMG 2X Daily Inverse Alternative Harvest ETF (MJIN): ETF Research Reports
To read this article on Zacks.com click here.
Zacks Investment Research