Best-Performing Leveraged ETFs of Last Week

Wall Street experienced a mixed week, initially weighed by AI bubble concerns before a strong Friday rally. This surge was fueled by Federal Reserve Chair Jerome Powell's Jackson Hole remarks, which boosted the probability of a September rate cut to 91.5% and sent the Dow Jones Industrial Average to a new record high (+1.9%) on August 22, 2025, alongside significant gains for the S&P 500 and Nasdaq. Despite Powell's caution on inflation from tariffs, broader market sentiment improved, leading to weekly gains for the S&P 500 (+0.3%) and Dow (+1.5%). Leveraged ETFs tied to cryptocurrency surges, inverse AI plays, regional banking strength, and cannabis reclassification hopes were among the top weekly performers.

Analysis

Wall Street experienced a bifurcated week, with mid-week declines on AI bubble fears giving way to a strong rally driven by monetary policy expectations. The primary catalyst was Federal Reserve Chair Jerome Powell's signal of a potential rate cut as soon as September, which drove the market-implied probability of such a move to 91.5%. This ignited a risk-on rally on August 22, 2025, sending the Dow Jones Industrial Average up 1.9% to a new record high, while the S&P 500 and Nasdaq gained 1.5% and 1.9% respectively. For the full week, however, performance was mixed with the Dow adding over 1.5% and the S&P 500 a modest 0.3%, while the tech-heavy Nasdaq shed 0.6%, reflecting the earlier AI-related profit-taking. This dynamic created distinct thematic winners, particularly in leveraged ETFs. The crypto space surged on renewed risk appetite, with Riot Platforms (RIOT) gaining 18% and boosting its 2x leveraged ETF (RIOX) by 35.7%. Concurrently, a 9.5% drop in Palantir (PLTR) amid the AI sector's weakness fueled an 18.6% gain in its inverse ETF (PLTZ). Other catalysts, including potential cannabis reclassification and resilient corporate activity bolstering the banking sector, also drove significant leveraged gains in ETFs like MSOX (+15.2%) and DPST (+16.2%).

Key Decisions for Investors

• With a September rate cut now heavily priced in at a 91.5% probability, investors should closely monitor upcoming inflation data, as any upside surprise, particularly related to the tariff costs Powell cited, could unwind the recent rally.
• The sharp divergence between the pullback in AI stocks like Palantir (-9.5%) and the surge in crypto assets like Riot Platforms (+18%) suggests a tactical rotation from crowded growth themes to assets more directly sensitive to monetary easing; consider re-evaluating exposure to the AI sector for either profit-taking or identifying new entry points.
• The significant gains in highly-leveraged thematic ETFs across crypto (RIOX), banking (DPST), and cannabis (MSOX) underscore the market's sensitivity to specific policy and macro catalysts, presenting tactical opportunities but also warranting caution due to their inherent volatility.
• Given the Dow's record high and the market's strong reaction, a significant portion of the positive news from a potential Fed pivot may already be reflected in prices, suggesting it may be prudent to manage risk for a potential 'sell the news' event post-Fed meeting.