How To Navigate Market Volatility: 5 ETFs That Strengthen Your Portfolio During Stock Turmoil

Global equity markets have been under pressure in recent sessions amid fears of a potential U.S. recession, triggered by cooling labor market conditions and struggling manufacturing activity.

Despite last month's business surveys showing expansion in services activity, investors remain worried that the world's largest economy may be slowing down, which could curb U.S. household discretionary spending and reduce corporate profits.

Risky assets have been at the epicenter of the current market turmoil, as stocks worldwide experienced heavy declines.

Don’t Miss:

• The CEOs of Uber and Salesforce are so impressed with this platform they put their own money behind it. Join them, invest in private credit, and earn 7-9% APY.
• With returns as high as 300%, it’s no wonder this asset is the investment choice of many billionaires. Uncover the secret.

Over the past three sessions, Japan's Nikkei 225 index plummeted by 19.5%, marking its worst three-day drop since the index's inception in 1950.

The Russell 2000 index, which tracks U.S. small-cap stocks, experienced a 10% decline during the same period.

The Nasdaq 100, represented by the Invesco QQQ Trust QQQ, has seen a 12% drop from its all-time highs in July.

The CBOE Volatility Index (VIX), often referred to as the market fear index, surged to briefly hit 60 points on Tuesday, its highest level since March 2020.

What Has Happened To Interest Rate Futures?

Recession fears, coupled with global equity market turmoil, have sparked wild speculation about Federal Reserve interest rate cuts.

A week ago, the market assigned only an 11.4% chance to a 50-basis-point rate cut in September, a probability that has now surged to 97.5%, according to the CME Group FedWatch tool.

Similarly, a week ago, the probability of year-end interest rates falling to 4-4.25% was zero, but as of Monday, it has rocketed to 72%.

Market-Implied Probabilities For Sept. 18's Fed Meeting

Rate-cut event Now* 1 Day Ago 1 Week Ago

July 29, 2024

50bp to 4.75-5% 97.5% 74% 11.4%

25bp to 5-5.25% 2.5% 26% 88.2%

Data: CME Group as of August 5, 2024 11:20 ET

Market-Implied Probabilities For Dec. 18's Fed Meeting

Year-end fed funds rate Now* 1 Day Ago 1 Week Ago,

July 29, 2024

4-4.25% 71.8% 66.8% 0.0%

4.25-4.5% 28.2% 33.2% 0.0%

4.5-4.75% 0.0% 0.0% 65.1%

4.75-5% 0.0% 0.0% 34.9%

Data: CME Group as of August 5, 2024 11:25 ET

Trending: Don’t miss out on the next NVIDIA – you can invest in the future of AI for only $10.
**This is a paid advertisement. Carefully consider the investment objectives, risks, charges and expenses of the Fundrise Innovation Fund before investing. This and other information can be found in the Fund's prospectus. Read them carefully before investing.

5 ETFs Rallying On Global Market Turmoil

While global equity markets have experienced significant declines, safe-haven assets have maintained their status and effectively shielded investor portfolios from volatility.

Moreover, leveraged and inverse investment strategies on equity indices or stocks have also seen sharp rallies amid market selloffs.

Here are 5 exchange-traded funds (ETFs) that have rallied over the last few sessions:

The Invesco CurrencyShares Japanese Yen Trust FXY

 has been a significant beneficiary of the global market rout, as declining interest rate expectations in the United States have reduced the dollar's "carry trade" advantage against the yen. Over the past four sessions, the FXY ETF has surged by 6.6%, marking its strongest rally since October 2008.

The iShares 20+ Year Treasury Bond ETF TLT  has posted gains for eight consecutive sessions, surging over 3.1% last Friday as fears of a cooling U.S. labor market emerged.

The ProShares Trust VIX Short-Term Futures ETF VIXY skyrocketed by over 20% on Monday alone, and by nearly 66% over the last three sessions.

The ProShares UltraPro Short QQQ QQQ which aims to achieve investment results equal to three times the inverse of the daily performance of the Nasdaq 100 index, has surged by over 23% in the past three sessions.

The ProShares UltraPro Short Russell 2000 SRTY, designed to seek an investment performance equal to three times the inverse of the daily move of the Russell 2000 index, has rallied by nearly 33% in the last three sessions.

ETFs Aren't The Only Way To Strengthen Your Portfolio

The current high-interest-rate environment has created an incredible opportunity for income-seeking investors to earn massive yields, but not through ETFs… Certain private market real estate investments are giving retail investors the opportunity to capitalize on these high-yield opportunities and Benzinga has identified some of the most attractive options for you to consider. 

For instance, the Ascent Income Fund from EquityMultiple targets stable income from senior commercial real estate debt positions and has a historical distribution yield of 12.1% backed by real assets. With payment priority and flexible liquidity options, the Ascent Income Fund is a cornerstone investment vehicle for income-focused investors. First-time investors with EquityMultiple can now invest in the Ascent Income Fund with a reduced minimum of just $5,000. Benzinga Readers: Earn a 1% return boost on your first EquityMultiple investment when you sign up here (accredited investors only).

Don't miss out on this opportunity to take advantage of high-yield investments while rates are high. Check out Benzinga's favorite high-yield offerings. 

© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.