Finance

Market volatility creating buzz for these two types of ETFs

Published

2 months ago

February 27, 2025

Business Finance News

What's behind the explosion in leverage and inverse ETFs

Market volatility appears to be boosting demand for two types of exchange-traded funds: leveraged and inverse.

And, Direxion CEO and ETF money manager Douglas Yones thinks market conditions will keep fueling demand for them.

“We have a lot of securities in the market that are … up a lot over the last five or 10 years. Market seemingly has been going sideways. We saw Friday’s correction,” he told CNBC’s “ETF Edge” this week. “There are people out there that are saying: ‘Hey, maybe I don’t want to be fully invested,’ but also don’t want to take the capital gain on selling a position. What can I do? I can take a long position in a short ETF and inverse ETF. I can basically neutralize my exposure.”

Leveraged and inverse ETFs give investors the opportunity to make monster bets on the stock market’s direction. Investors can go long or short.

Yones’ firm is heavily involved in the space. Yones runs the Direxion Daily Semiconductor Bull 3X Shares (SOXL), which is one of the largest leveraged/inverse ETFs. According to FactSet, Broadcom, Nvidia and Qualcomm are among the ETF’s top holdings.

As of Wednesday’s market close, Yones’ ETF is up almost 84% over the past two years, but off 36% over the past year. It’s also down more than 16% over the past week.

“There are market-moving headlines happening two to three times a day. And so, the volatility is growing up, not down,” said Yones. “We think that holds for the whole year.”

VettaFi’s Todd Rosenbluth also sees growing demand for single-stock leveraged ETFs.

“Single-stock leveraged ETFs probably sound hard to wrap your head around. But it’s one stock you get the risk-on or in case of inverse risk-off exposure to that and the liquidity benefits of the ETF wrapper,” the firm’s head of research said.

Finance

More Americans buy groceries with buy now, pay later loans

Published

4 hours ago

April 26, 2025

Business Finance News

People shop for produce at a Walmart in Rosemead, California, on April 11, 2025.

Frederic J. Brown | Afp | Getty Images

A growing number of Americans are using buy now, pay later loans to buy groceries, and more people are paying those bills late, according to new Lending Tree data released Friday.

The figures are the latest indicator that some consumers are cracking under the pressure of an uncertain economy and are having trouble affording essentials such as groceries as they contend with persistent inflation, high interest rates and concerns around tariffs.

In a survey conducted April 2-3 of 2,000 U.S. consumers ages 18 to 79, around half reported having used buy now, pay later services. Of those consumers, 25% of respondents said they were using BNPL loans to buy groceries, up from 14% in 2024 and 21% in 2023, the firm said.

Meanwhile, 41% of respondents said they made a late payment on a BNPL loan in the past year, up from 34% in the year prior, the survey found.

Lending Tree’s chief consumer finance analyst, Matt Schulz, said that of those respondents who said they paid a BNPL bill late, most said it was by no more than a week or so.

“A lot of people are struggling and looking for ways to extend their budget,” Schulz said. “Inflation is still a problem. Interest rates are still really high. There’s a lot of uncertainty around tariffs and other economic issues, and it’s all going to add up to a lot of people looking for ways to extend their budget however they can.”

“For an awful lot of people, that’s going to mean leaning on buy now, pay later loans, for better or for worse,” he said.

He stopped short of calling the results a recession indicator but said conditions are expected to decline further before they get better.

“I do think it’s going to get worse, at least in the short term,” said Schulz. “I don’t know that there’s a whole lot of reason to expect these numbers to get better in the near term.”

The loans, which allow consumers to split up purchases into several smaller payments, are a popular alternative to credit cards because they often don’t charge interest. But consumers can see high fees if they pay late, and they can run into problems if they stack up multiple loans. In Lending Tree’s survey, 60% of BNPL users said they’ve had multiple loans at once, with nearly a fourth saying they have held three or more at once.

“It’s just really important for people to be cautious when they use these things, because even though they can be a really good interest-free tool to help you kind of make it from one paycheck to the next, there’s also a lot of risk in mismanaging it,” said Schulz. “So people should tread lightly.”

Lending Tree’s findings come after Billboard revealed that about 60% of general admission Coachella attendees funded their concert tickets with buy now, pay later loans, sparking a debate on the state of the economy and how consumers are using debt to keep up their lifestyles. A recent announcement from DoorDash that it would begin accepting BNPL financing from Klarna for food deliveries led to widespread mockery and jokes that Americans were struggling so much that they were now being forced to finance cheeseburgers and burritos.

Over the last few years, consumers have held up relatively well, even in the face of persistent inflation and high interest rates, because the job market was strong and wage growth had kept up with inflation — at least for some workers.

Earlier this year, however, large companies including Walmart and Delta Airlines began warning that the dynamic had begun to shift and they were seeing cracks in demand, which was leading to worse-than-expected sales forecasts.