Why Nasdaq-100 Inverse ETF SQQQ Is Volatile This Week

ProShares UltraPro Short QQQ ETF SQQQ shares are trading lower by 1.86% to $17.98 Friday morning, pulling back following recent strength. The leveraged ETF has seen increased volatilty this week after Fitch downgraded the long-term credit rating of the US. This has weighed on market sentiment and pressured growth sectors in recent sessions.

SQQQ rises when the Nasdaq-100 QQQ index falls, and a credit rating downgrade can trigger a decline in the broader market indices, including the Nasdaq-100.

As investors move away from riskier assets, they may seek protection in inverse ETFs like SQQQ as a way to hedge against potential losses in the market. This demand for SQQQ drives its price higher.

Additionally, a credit rating downgrade can lead to higher borrowing costs for the US government, as investors may demand higher yields to compensate for the increased risk.

This can also put downward pressure on the stock market and contribute to the rise of inverse ETFs like SQQQ.

What Happened With Fitch?

In a move that sent shockwaves through global markets, Fitch Ratings downgraded the United States’ sovereign credit grade from AAA to AA+. This downgrade, echoing a move by S&P Global more than a decade ago, comes as a result of several concerning factors affecting the nation’s fiscal management...Read More

According to data from Benzinga Pro, SQQQ has a 52-week high of $69.55 and a 52-week low of $16.38.