SQQQ Soars 8.2% Amid Tech Slump, Inflation Fears
SQQQ Soars 8.2% Amid Tech Slump, Inflation Fears
The ProShares UltraPro Short QQQ ETF (SQQQ), which aims for daily returns three times the inverse of the Nasdaq-100 index, surged 8.2% to $38.36 on Friday. This rise comes amidst a broader tech sector decline fueled by inflation concerns and weakening consumer sentiment. Over the past month, SQQQ has seen a remarkable 23.7% increase, and a 24.7% year-to-date surge, according to etf.com data. This performance is a direct counterpoint to the Invesco QQQ Trust (QQQ), which tracks the Nasdaq-100 and has fallen 7.6% in the past month and 8.1% year-to-date.
The recent gains in SQQQ are largely attributed to a significant selloff in technology stocks. Factors contributing to this decline include President Donald Trump's announcement of reciprocal tariffs, escalating fears of a global trade war, and unexpectedly high inflation data. The University of Michigan's final consumer sentiment report further exacerbated these concerns, revealing a bleak outlook on inflation expectations and overall economic confidence. A sharp increase in five-year inflation expectations to 4.1%, the highest since 1993, fueled anxieties about the Federal Reserve maintaining higher interest rates for an extended period. Higher inflation negatively impacts corporate profitability, particularly affecting growth stocks within the Nasdaq-100, which are sensitive to rising borrowing costs.
QQQ's top ten holdings highlight the tech sector's struggles. Eight of these holdings show year-to-date declines, with Tesla Inc. (TSLA) leading at -32.7%, followed by Broadcom Inc. (AVGO) at -28.9%, Nvidia Corp. (NVDA) at -23.4%, and Alphabet Inc. (GOOGL) at -18.8%. Apple Inc. (AAPL), representing 9.5% of QQQ's assets, is down 9.9% year-to-date, and Microsoft Corp. (MSFT), at 7.7% of the fund, has dropped 11.3%. Only Costco Wholesale Corp. (COST) and Netflix Inc. (NFLX) have posted year-to-date gains of 3.6% and 4.5%, respectively.
Despite a recent decline in short interest – dropping 28.7% to 11,820,000 shares by March 15th from 16,570,000 shares on February 28th – SQQQ's assets under management have grown to $2.3 billion, with average daily volume reaching $2.1 billion. The ETF traded at just under $39 on Monday, and hit $37.44 on Tuesday, before closing at $38.36 on Friday. Several hedge funds have recently adjusted their positions in SQQQ, with some increasing their stakes. SQQQ also announced a quarterly dividend of $0.4823, payable April 1st to investors of record on March 26th. The 52-week high for SQQQ is $64.95, and the 52-week low is $26.21.
The ProShares UltraPro Short QQQ ETF (SQQQ), which aims for daily returns three times the inverse of the Nasdaq-100 index, surged 8.2% to $38.36 on Friday. This rise comes amidst a broader tech sector decline fueled by inflation concerns and weakening consumer sentiment. Over the past month, SQQQ has seen a remarkable 23.7% increase, and a 24.7% year-to-date surge, according to etf.com data. This performance is a direct counterpoint to the Invesco QQQ Trust (QQQ), which tracks the Nasdaq-100 and has fallen 7.6% in the past month and 8.1% year-to-date.
The recent gains in SQQQ are largely attributed to a significant selloff in technology stocks. Factors contributing to this decline include President Donald Trump's announcement of reciprocal tariffs, escalating fears of a global trade war, and unexpectedly high inflation data. The University of Michigan's final consumer sentiment report further exacerbated these concerns, revealing a bleak outlook on inflation expectations and overall economic confidence. A sharp increase in five-year inflation expectations to 4.1%, the highest since 1993, fueled anxieties about the Federal Reserve maintaining higher interest rates for an extended period. Higher inflation negatively impacts corporate profitability, particularly affecting growth stocks within the Nasdaq-100, which are sensitive to rising borrowing costs.
QQQ's top ten holdings highlight the tech sector's struggles. Eight of these holdings show year-to-date declines, with Tesla Inc. (TSLA) leading at -32.7%, followed by Broadcom Inc. (AVGO) at -28.9%, Nvidia Corp. (NVDA) at -23.4%, and Alphabet Inc. (GOOGL) at -18.8%. Apple Inc. (AAPL), representing 9.5% of QQQ's assets, is down 9.9% year-to-date, and Microsoft Corp. (MSFT), at 7.7% of the fund, has dropped 11.3%. Only Costco Wholesale Corp. (COST) and Netflix Inc. (NFLX) have posted year-to-date gains of 3.6% and 4.5%, respectively.
Despite a recent decline in short interest – dropping 28.7% to 11,820,000 shares by March 15th from 16,570,000 shares on February 28th – SQQQ's assets under management have grown to $2.3 billion, with average daily volume reaching $2.1 billion. The ETF traded at just under $39 on Monday, and hit $37.44 on Tuesday, before closing at $38.36 on Friday. Several hedge funds have recently adjusted their positions in SQQQ, with some increasing their stakes. SQQQ also announced a quarterly dividend of $0.4823, payable April 1st to investors of record on March 26th. The 52-week high for SQQQ is $64.95, and the 52-week low is $26.21.
