The S&P 500 rose to new highs after the Federal Reserve let the capital markets know that the economy is strong enough to stand on its own two legs without the central bank’s help.
As such, the Fed said that it would begin its stimulus tapering agenda with a pullback on bond buying. Last year, the Fed shored up the debt market by purchasing bonds, which included a number of bond exchange traded funds (ETFs).
Wall Street cheered the Fed’s faith in the economy, causing the S&P 500 to reach a new all-time high of 4,660.57. The index is up about 24% for the year.
“Stocks rose to new records on Wednesday after the Federal Reserve made its long-anticipated announcement to slow the monthly bond purchases the central bank implemented during the pandemic,” a CNBC report says. “Major averages climbed steadily into the green as the central bank said it will begin to scale back the bond buying later this month and reiterated that it would be in no rush to raise interest rates after finishing the taper next year.”
Two ETFs to Play the S&P Ups and Downs
Traders looking to make moves in the S&P 500 can do so with a pair of options from Direxion Investments. Moreover, they can triple up their leverage in order to amplify their gains as long as they’re also aware of the potential downside risk as well.
Two options from Direxion allow traders to take the bullish or bearish side of the S&P 500:
- The Direxion Daily S&P 500 Bear 3X ETF (SPXS): SPXS seeks daily investment results equal to 300% of the inverse of the daily performance of the S&P 500 Index. The fund, under normal circumstances, invests in swap agreements, futures contracts, short positions, or other financial instruments that, in combination, provide inverse (opposite) or short leveraged exposure to the index equal to at least 80% of the fund’s net assets (plus borrowing for investment purposes).
- The Direxion Daily S&P 500® Bull 3X Shares ETF (SPXL): SPXL, under normal circumstances, invests at least 80% of its net assets (plus borrowing for investment purposes) in financial instruments, such as swap agreements and securities of the index, ETFs that track the index, and other financial instruments that provide daily leveraged exposure to the index or ETFs that track the index.
For more news, information, and strategy, visit the Leveraged & Inverse Channel.