Content and data provided by various third parties and Fidelity − Terms of Use | Help/Glossary
Research > ETFs > ETF / ETP Commentary > 

Rate Cuts Could Uplift These 2 Leveraged ETFs

BY | ETF Database
09/13/2024 | 1151 VIEWS
Signs of a cooling economy during the month of August can help substantiate the Federal Reserve’s decision to cut interest rates. In turn, this could uplift a pair of leveraged exchange traded funds that focus on consumer spending.The change won’t be immediate, as noted by a report from the National Retail Federation. But when it does take effect, traders may want to explore opportunities in the retail sector as borrowing costs decline. “Going forward, lower interest rates should benefit households that are under financial pressure from loans they have taken on to meet everyday needs,” the NRF noted. The report added that lower interest rates “will also make it more affordable for consumers to borrow money through mortgages, home improvement loans, car loans and credit cards, which can encourage spending and increase demand for goods and services.” During the month of August, inflation declined to its lowest level since February 2021, according to the Labor Department. The 12-month inflation rate is currently at 2.5%, getting closer to the Fed’s target level of 2%. Much of the capital markets are anticipating that a rate cut will happen this month and that potentially more will come before the year closes. That should bode well for the retail sector. “The Fed is widely expected to cut rates at least twice this year, and the easing of interest rates should provide support to interest-sensitive sectors going into the fall and winter,” the NRF added. “That, in turn, should improve the outlook for many financially constrained households. While consumers will continue to be savvy about their purchases, these factors are a welcome development and should support their propensity to spend.”2 ETFs to ConsiderWith falling rate cuts, the increased ability to spend could translate to stronger retail and consumer discretionary spending. If that’s the case, Direxion has a pair of leveraged ETFs to build off that bullish notion. On one hand, consider the Direxion Daily Retail Bull 3X ETF (RETL B+). The fund seeks daily investment results of 300% of the daily performance of the S&P Retail Select Industry Index. The top three subsectors in terms of exposure in the index are automotive, specialty, and apparel retail. Additionally, traders can consider the Direxion Daily Consumer Discretionary Bull 3X ETF (WANT C+) to play off increased consumer discretionary spending. The fund seeks daily investment results equaling 300% of the daily performance of the Consumer Discretionary Select Sector Index. The index’s top three weightings include broadline retail, hotel/restaurant/leisure, and specialty retail. For more news, information, and analysis, visit the Leveraged & Inverse Channel.

More Commentary

Cybersecurity Debt Risk Could Be Boon for This ETF
BY | ETF Database
4:40 am ET 11/22/24 | 21 VIEWS
Active ETFs Offer Tax Perks, Too
BY | ETF Database
11/21/2024 | 89 VIEWS
Sell on the Pop Prospects: November 20 Edition
BY | ETF Database
11/20/2024 | 42 VIEWS
View more Commentary

Search Commentary

Enter Keyword(s)
Filter Results

Performance data shown is past performance and is no guarantee of future results. Current performance may be higher or lower than the performance data quoted. Yield and return will vary, therefore you have a gain or loss when you sell your shares. For standard quarterly performance, go to the fund's Snapshot page by clicking on the ETF/ETP's symbol.

ETFs may trade at a premium or discount to their NAV and are subject to the market fluctuations of their underlying investments.

For iShares ETFs, Fidelity receives compensation from the ETF sponsor and/or its affiliates in connection with an exclusive long-term marketing program that includes promotion of iShares ETFs and inclusion of iShares funds in certain FBS platforms and investment programs. Please note, this security will not be marginable for 30 days from the settlement date, at which time it will automatically become eligible for margin collateral. Additional information about the sources, amounts, and terms of compensation can be found in the ETF's prospectus and related documents. Fidelity may add or waive commissions on ETFs without prior notice. BlackRock and iShares are registered trademarks of BlackRock, Inc. and its affiliates.

FBS receives compensation from the fund's advisor or its affiliates in connection with a marketing program that includes the promotion of this security and other ETFs to customers ("Marketing Program"). The Marketing Program creates incentives for FBS to encourage the purchase of certain ETFs. Additional information about the sources, amounts, and terms of compensation is in the ETF's prospectus and related documents. Please note that this security will not be marginable for 30 days from the settlement date, at which time it will automatically become eligible for margin collateral.

News, commentary (including "Related Symbols") and events are from third-party sources unaffiliated with Fidelity. Fidelity does not endorse or adopt their content. Fidelity makes no guarantees that information supplied is accurate, complete, or timely, and does not provide any warranties regarding results obtained from their use.

Any data, charts and other information provided on this page are intended to help self-directed investors evaluate exchange traded products (ETPs), including, but limited to exchange traded funds (ETFs) and exchange traded notes (ETNs). Criteria and inputs entered, including the choice to make ETP comparisons, are at the sole discretion of the user and are solely for the convenience of the user. Analyst opinions, ratings and reports are provided by third-parties unaffiliated with Fidelity. All information supplied or obtained from this page is for informational purposes only and should not be considered investment advice or guidance, an offer of or a solicitation of an offer to buy or sell a particular security, or a recommendation or endorsement by Fidelity of any security or investment strategy. Fidelity does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating ETPs. Fidelity makes no guarantees that information supplied is accurate, complete, or timely, and does not provide any warranties regarding results obtained from their use. Determine which securities are right for you based on your investment objectives, risk tolerance, financial situation and other individual factors and re-evaluate them on a periodic basis.

Before investing in any exchange traded product, you should consider its investment objective, risks, charges and expenses. Contact Fidelity for a prospectus, offering circular or, if available, a summary prospectus containing this information. Read it carefully.

Copyright 1998–2024 FMR LLC. 
All rights reserved.