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6 Top Leveraged Areas of Last Week

Last week was upbeat for Wall Street. The S&P 500 (up 2.64%), the Dow Jones (up 4.07%), the Nasdaq Composite (up 3.09%) and the small-cap Russell 2000 (up 7.32%) were all on an uptrend due to the signing of the $1.9 trillion COVID-19 relief bill. The Dow Jones, the S&P 500 and the Russell 2000, in fact, hit new record highs.

Among other positive developments, Novavax NVAX announced very impressive updates on its protein-based COVID-19 vaccine candidate, NVX-CoV2373. The company’s vaccine candidate has delivered final efficacy of 96.4% in a pivotal phase 3 trial in the U.K., against mild, moderate and severe diseases caused by the original COVID-19 strain (read: Novavax ETFs to Shine Bright on Positive Vaccine Update).

Meanwhile, U.S. consumer prices witnessed a solid increase in February, resulting in the largest annual gain in a year, but the underlying inflation remained lukewarm amid still-sloth demand for services like airline travel.  Consumer prices in the United States increased 0.4% sequentially in February, slightly higher than 0.3% in January but matching market forecasts. The increase in the gasoline index (+6.4%) made up more than half of CPI gain (read: U.S. Consumer Inflation Moderate: ETFs to Win).

While moderate inflation data kept U.S. treasury yields at check at the start of the week, benchmark yield touched 1.64% on Mar 12, 2021. Analysts surveyed by MarketWatch now expect the U.S. economy to expand a havoc 6% in 2021. President Biden also indicated that he would make all adults eligible for vaccines by May 1.

Against this backdrop, below we highlight a few leveraged ETF areas that gained the most last week.

Consumer Discretionary             

The section was a beneficiary of the stimulus bill. About 85% of households was expected to see the third round of payments direct-deposited into their account last weekend, according to a tweet from the House Ways and Means Committee. This has every reason to boost U.S. consumers’ discretionary spending.

Retail Bull 3X Direxion RETL – Up 51.76%

Consumer Discretionary Bull 3X Direxion WANT – Up 19.52%

Aerospace & Defense    

The aerospace and defense sector has started recovering in 2021, after a tough 2020. While the prospect of defense spending is expected to remain undisturbed, the commercial aerospace sector has also been showing improvement.

The Biden administration’s fiscal 2022 budget proposal is expected to propose between $704 billion and $708 billion for defense, according to Bloomberg (as quoted on Defense One). Though it was less than the 2020’s budget of about $705 billion, no steep reduction acted as a tailwind for the space. 

Aerospace Defense Bull 3X Direxion DFEN – Up 24.11%

Small-Caps

Solid fiscal stimulus under the Biden presidency and a wider coverage of vaccination gave a boost to the small-cap stocks, which were mainly focused on domestic economic improvement.

Smallcap Bull 3X Direxion TNA – Up 23.61%      

Ultrapro Russell 2000 Proshares URTY – Up 23.50%

Regional Banks

Banks have been a beneficiary of the recent jump in long-term interest rates. As banks seek to borrow money at short-term rates and lend at long-term rates, a steepening yield curve will earn more on lending and pay less on deposits, thereby leading to a wider spread. This will expand net margins and increase banks’ profits. 

Regional Banks Bull 3X Direxion DPST – Up 17.38%

Real Estate

There had been a rise in cost of shelter in the United States, which is a plus for the real estate stocks. The moderate inflation trend also points to the fact that rates are going to rise in the coming days at a moderate pace. The expectation of modest gains in rates also backed a real estate rally last week.

Real Estate Bull 3X Direxion DRN – Up 16.8%

Biotech

Upbeat data from various coronavirus vaccine makers have probably kept the appeal of the biotech space alive. Last week, news came out that the Pfizer-BioNTech COVID-19 vaccine was found 97% effective in symptomatic cases and 94% in asymptomatic infections.

S&P Biotech Bull 3X Direxion LABU – Up 15.83%

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