Up 130%, Big Tech's Dominance Could Keep This ETF Elevated

Big tech’s dominance continues into the second half of 2023, translating into more gains for the Direxion Daily Dow Jones Internet Bull 3X Shares (WEBL), which is already up over 130% for the year.

Household names like Google and Microsoft have already reported their earnings with positive results, driving more gains for big tech. The Nasdaq 100 continues to maintain its upward trajectory as the index is up over 40% for the year.

“So far, earnings have been better than expected, helping us avoid the ‘earnings apocalypse’ many had feared,” a Zacks article published in Yahoo! Finance noted.

One of the recurring themes that have been boosting big tech is the rise of artificial intelligence (AI). Big tech companies continue to pour research and development into harnessing the technology’s capabilities.

WEBL, which includes big names like Amazon, Meta Platforms (Facebook), and Google’s parent company Alphabet, seeks daily investment results that equate to 300% of the daily performance of the Dow Jones Internet Composite Index. The extra leverage allows traders to maximize their gains without having to resort to borrowing trading capital from a margin account.

Rising Rates Not Worrying Markets

Last year, rising interest rates was one of the primary speed bumps of big tech, but the wall of worry surrounding interest rates has been slowly crumbling as 2023 wears on. While the its expected that the Federal Reserve will continue to raise rates in its next meeting in order to tamp down inflation, some analysts don’t see it affecting the market rally.

“The Federal Reserve is likely not done raising the cost of money to tame inflation,” David Saito-Chung wrote in Investors.com “So, interest rates may remain top of mind for investors.’

“Even after recent encouraging data showing inflation cooled further in May, Wall Street still eyes the possibility the U.S. central bank could raise short-term interest rates by at least 25 basis points later in the year,” Chung added. “Nonetheless, market veterans see a touch of gains in stock prices ahead.”

According to the CME FedWatch Tool, there’s an 85% expectation that the Fed will raise rates by another 25 basis points.

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