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ETF Winners From the Fed Meeting & Yellen's Testimony

As expected, the Federal Reserve on Wednesday hiked its benchmark interest rate by 25 bps. The latest hike takes it to a target range of 4.75%-5.00%, the highest since October 2007. The move also marked the ninth increase in rates since March 2022.

In a statement, the Fed said recent banking sector developments are likely to bring "tighter credit conditions for households and businesses.” The Fed expects the real GDP growth to be 0.4% for 2023, (down from 0.5% projected in December) and 1.2% for 2024 (down from 1.6% projected in December).

The Fed expects the PCE inflation to be 3.3% for 2023 (up from 3.1% projected in December). However, the PCE inflation projection remained unchanged at 2.5%. The Fed Funds rate is expected to remain uncharged at 5.1% for this year, increase to 4.3% for 2024 (up from 4.1% projected in December) and unchanged at 3.1% for 2025.

However, markets crashed as U.S. Treasury secretary Yellen said that the Biden administration is not considering a move to broaden deposit insurance to protect savers with balances above $250,000 in the near term.

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Many investors were expecting the government to bail out affected depositors and shareholders of the failed banks. Yellen’s opposing remarks sent shockwaves through the market. Plus, lower GDP growth projections offered by the Fed probably dampened investors’ mood.

Winning ETF Areas

Against this backdrop, below we highlight a few ETF areas that gained the most yesterday. Notably, a few sectors like technology start-ups, biotech and real estate were highly associated with recently-failed regional banks. So, these sectors have been marred considerably due to the ongoing banking crisis. Meanwhile, precious metal like gold and silver prices should gain ahead as the greenback dropped to a seven-week low.

Biotech Bear

S&P Biotech Bear -3X Direxion (LABD) – Up 11.3% on Mar 22

The underlying S&P Biotechnology 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).

Real Estate Bear

Real Estate Bear -3X Direxion (DRV) – Up 10.7% on Mar 22

The underlying Real Estate Select Sector Index includes securities of companies from the real estate management and development and real estate investment trusts, excluding mortgage REITs.

Big Banks Bear

MicroSectors U.S. Big Banks Index -3X Inverse Leveraged ETNs (BNKD) – Up 9.1% on Mar 22

The underlying Solactive MicroSectors U.S. Big Banks Index is an equal-dollar weighted index and seeks to provide exposure to the 10 largest U.S. banks and financial services companies.

Small-Cap Bear

Direxion Daily Small Cap Bear 3X Shares (TZA) – Up 8.8% on Mar 22

The underlying Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe and is comprised of the smallest 2000 companies in the Russell 3000 Index, representing approximately 10% of the total market capitalization of that index.

Silver Miner Bull

ETFMG Prime 2x Daily Junior Silver Miners ETF (SILX) – Up 8.1% on Mar 22

The underlying Prime Junior Silver Miners & Explorers Index provides a benchmark for investors interested in tracking public, small-cap companies that are active in the silver mining exploration and production industry.

Travel Bear

MicroSectors Travel -3X Inverse Leveraged ETNs FLYD – Up 7.5% on Mar 22

The underlying MerQube MicroSectors U.S. Travel Index is a total return index that tracks the stock prices of U.S. domiciled and listed securities that are materially engaged in specified segments of the travel industry.

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Direxion Daily S&P Biotech Bear 3X Shares (LABD): ETF Research Reports

Direxion Daily Small Cap Bear 3X Shares (TZA): ETF Research Reports

Direxion Daily Real Estate Bear 3X Shares (DRV): ETF Research Reports

MicroSectors U.S. Big Banks Index -3X Inverse Leveraged ETNs (BNKD): ETF Research Reports

ETFMG Prime 2x Daily Junior Silver Miners ETF (SILX): ETF Research Reports

MicroSectors Travel -3X Inverse Leveraged ETNs (FLYD): ETF Research Reports

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Zacks Investment Research