Donald Trump’s win and the Fed’s newest fee minimize fueled the most effective week of 2024 for the U.S. inventory market. The S&P 500 and the Dow Jones capped their greatest weekly acquire since early November 2023, up 4.7% every. The broad market index topped the 6,000 degree for the primary time, whereas the blue-chip index crossed the 44,000 degree. The tech-heavy Nasdaq Composite Index touched 19,000 post-election for the primary time and climbed greater than 5% final week. In the meantime, the small cap-focused Russell 2000 Index rose greater than 8%.
The market is betting that the second Trump administration will present a lift to shares, given his extra market-friendly insurance policies. Throughout his marketing campaign, Trump proposed company tax fee cuts, deregulation and different insurance policies that favor home progress, which would supply extra stimulus to the U.S. economic system. The anticipation of larger tariff limitations and a step to maneuver manufacturing again residence will drive shares increased (learn: ETFs Set to Soar on Trump’s Presidential Victory).
Whereas the rally was broad-based, a couple of shares soared in anticipation of the so-called Trump commerce. Particularly, Tesla (TSLA) reclaimed $1 trillion in market capitalization for the primary time since 2022 as buyers guess that Tesla and CEO Elon Musk will profit from a possible Trump administration. Shares of the electrical carmaker soared 29% final week, marking the most effective weekly efficiency because the week ended Jan. 27, 2023.
AI darling NVIDIA (NVDA) turned the primary firm to exceed $3.6 trillion in market capitalization and joined the Dow Jones Industrial Common final Friday, changing chipmaker Intel (INTC). The reshuffle displays a notable milestone, suggesting continued progress for the chipmaker. Most analysts imagine NVIDIA will turn into way more useful sooner or later resulting from its dominance within the billion-dollar AI chip market (learn: ETFs to Buy on NVIDIA’s Historic Journey to $3.6 Trillion).
The world’s largest cryptocurrency additionally soared, topping $80,000 for the primary time. Trump embraced digital property throughout his marketing campaign and vowed to make the US “the crypto capital of the planet.” The worth of Bitcoin has now risen by greater than 80% this yr.
Given the massive rally in a couple of particular person shares, single-stock ETFs additionally surged. Not like conventional ETFs, which generally observe a broad index or sector, single-stock ETFs present publicity to the efficiency of 1 particular firm through the use of derivatives. This permits buyers to realize publicity to a specific inventory with out having to purchase the inventory immediately.
Single-stock ETFs faucet the playing mindset that exists in markets. There are at the moment 4 dozen single-stock ETFs in the marketplace with a mixed $3.5 billion in property, in accordance with Morningstar information. 5 companies, AXS, Direxion, YieldMax, GraniteShares and Innovator, present all of the single-stock ETFs at the moment obtainable in the marketplace.
We’ve got highlighted 5 single-stock ETFs which have outperformed final week. The strong development is more likely to proceed given the identical developments prevail.
GraniteShares 2X Lengthy COIN Every day ETF (CONL) – Up 104.5%
GraniteShares 2x Lengthy COIN Every day ETF seeks two occasions (200%) the every day share change of the widespread inventory of Coinbase World (COIN). It has amassed $517.5 million in its asset base whereas charging 1.15% in annual charges.
GraniteShares 2x Lengthy PLTR Every day ETF (PTIR) – Up 85.3%
GraniteShares 2x Lengthy PLTR Every day ETF seeks two occasions the every day share change of the widespread inventory of Palantir Applied sciences (PLTR). It has gathered $27.3 million in its asset base since its inception in September and costs 1.15% in annual charges.
T-REX 2X Lengthy Tesla Every day Goal ETF (TSLT) – Up 62%
T-REX 2X Lengthy Tesla Every day Goal ETF seeks every day leveraged funding outcomes to enlarge (200%) the every day efficiency of Tesla. It has AUM of $391.9 million and costs 1.05% in annual charges (learn: Tesla ETFs Soar on Trump Win: Should You Buy, Hold or Sell?).
Defiance Every day Goal 2x Lengthy MSTR ETF (MSTX) – Up 35%
Defiance Every day Goal 2x Lengthy MSTR ETF seeks every day leveraged funding outcomes of two occasions the every day share change within the share worth of MicroStrategy (MSTR). It costs 1.29% in annual charges and has AUM of $593.1 million.
Direxion Every day NVDA Bull 2X Shares (NVDU) – Up 18.4%
Direxion Every day NVDA Bull 2X Shares seeks to enlarge (200%) the every day efficiency of NVIDIA. It has amassed $640.6 million in its asset base and costs 95 bps in annual charges.
Draw back Threat to Single-Inventory Investing
Whereas single-stock ETFs provide a centered option to put money into an organization, they arrive with important dangers resulting from their lack of diversification and publicity to the volatility of a single inventory. They’re usually extra fitted to skilled buyers who perceive and are keen to just accept these dangers. Right here is the chance related to these ETFs:
Excessive Threat: If the particular firm underperforms, buyers may lose a considerable amount of cash.
Lack of Diversification: One of many key rules of threat administration in investing is diversification. Single-stock ETFs go in opposition to this precept, as they’re invested totally in a single firm.
Market Volatility: A single-stock ETF is topic to the volatility of the person inventory, which could be influenced by company-specific information and occasions.
Administration Charges: Whereas usually decrease than mutual funds, ETFs nonetheless include administration charges, which might eat into your funding returns over time, particularly in a narrowly centered fund like a single-stock ETF.
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The views and opinions expressed herein are the views and opinions of the writer and don’t essentially replicate these of Nasdaq, Inc.
