Last week’s sell-off in U.S. equities, which was highlighted by a steep decline in technology shares was an afterthought as the Dow Jones Industrial Average climbed over 450 points today while tech recovered, benefitting the Direxion Daily Technology Bull 3X ETF (NYSEArca: TECL).
TECL was up over 7.5% just under an hour before the close of today’s trading session. The ETF has been a beneficiary of the historical bull run that has been seeing immense growth in technology stocks, which has helped it return almost 50% year-to-date and close to 80% within the last three years.
TECL seeks daily investment results equal to 300% of the daily performance of the Technology Select Sector Index. The fund invests in 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, which includes domestic companies from the technology sector.
Like most technology ETFs, TECL took a brunt of last week’s sell-off that saw the Dow lose over 1,300 points in two days, but it may continue its upward trajectory with the help of positive third-quarter earnings from tech giants like Netflix (etftrends.com/quote/NFLX).
Netflix Could Kickstart Tech Q3 Earnings
Netflix is scheduled to report its third quarter earnings today, which could give the tech sector a much-needed revival after last week’s sell-off. Some analysts are forecasting that rising interest rates could be a factor that might hamper the company’s future growth.
Netflix is trying to slough off a subscriber growth slump that is causing some analysts from Goldman Sachs and Raymond James to slash their 12-month price targets for the stock.
“Longer term, we expect Netflix will continue to invest and market behind its ramping global original programming and we raise long-term marketing expenses [as a percent]of revenues by ~100 [basis points versus our]prior forecast,” Morgan Stanley analyst Benjamin Swinburne said in a note. “We also raise the incremental cost of debt based on rising interest rates, with Netflix still needing to raise an additional ~$5 [billion]of debt over the next two years before reaching positive free cash flow in 2021.”