After rising on easing trade tensions on Tuesday, US stock market indexes crashed yesterday. The S&P 500 (SPY) fell 2.9%, and the Nasdaq (QQQ) fell 3.02%.
The risk scenario The S&P 500’s rally has stalled just shy of 2,500. Investors are drawn to to riskier assets such as equities when they expect further expansion in the economy. The S&P 500 (SPY), which comprises the 500 largest stocks in the United States, is a constituent of the Conference Board Leading Economic Index […]
Rate cut and stocks Monetary accommodation is generally good for stocks. A cut in interest rates makes borrowing cheaper for households and businesses, pushing them to spend and invest. A rate cut is good for stocks because it allows companies to borrow money at lower interest rates and invest in new plants, machinery, or operation expansion, […]
Leveraged ETFs seek to provide a certain multiple (generally 2x or 3x) of daily returns on the underlying index. The daily movements in the underlying index and subsequent changes in ETF exposure may mean the ETF manager needs to rebalance the portfolio daily.
While traditional ETFs seek to mirror the performance of an underlying index, leveraged ETFs seek to deliver multiples of the daily returns of the benchmark index that they track. For example, the ProShares Ultra S&P500 (SSO) seeks to achieve twice the daily returns of the S&P 500, before fees and expenses.
