Illinois Tool Works (NYSE: ITW) stock has pulled back in the past few days as investors position themselves for the upcoming earnings report that will provide more color on its business. While growth expectations are low, the stock has formed the rare inverted head-and-shoulders pattern, pointing to a rebound.

Illinois Tool Works is a dividend king with slowing sales growth

Illinois Tool Works is a large American industrial company that makes products used directly and indirectly by millions of people globally. 

It makes automotive products that are used by large companies like General Motors and Ford, construction products like Paslode, Ramset, and Red Head, and food equipment like commercial dishwashers and ovens.

ITW has grown to become a dividend king, a company that has paid and raised its dividends for over 50 years. It now has a dividend yield of 2.43%, a five-year growth of 7.4%, and a payout ratio of 58%.

Illinois Tool Works stock has come under pressure in the past few months as the US-Iran war has led to a surge in key raw material costs. At the peak of this war, the stock dropped from $303 to $241 within weeks.

The next key catalyst for the ITW stock price is the upcoming earnings report, which will provide more color on its business. The report will come out on July 28th this year.

Yahoo Finance data shows that analysts expect the upcoming report will show that its revenue rose by 3.36% in the last quarter to $4.19 billion. Its guidance for the third quarter’s number will be $4.18 billion, up by 3%. Its annual revenue is expected to come in at $16.6 billion from the previous year’s $16 billion.

The most recent results showed that ITW delivered solid numbers, with its revenue rising by 5% in Q1, with its margin rising by 60 basis points to 25.4%. Its earnings per share (EPS) rose by 12% to $2.66.

READ MORE: Illinois Tool Works stock: why Josh Brown says ITW is the ‘best’ in market

Valuation concerns persist

A key concern now is on its valuation, which is a bit elevated for a slow-growing industrial company. 

Illinois Tool Works trades with a forward price-to-earnings ratio of 23.38, slightly higher than the sector median of 20. The S&P 500 Index has a multiple of 22.

Most notably, ITW now trades with a higher multiple than other faster-growing companies like Micron and Nvidia. Micron, whose revenue is growing by triple digits and has higher margins, trades with a forward multiple of 13, while Nvidia has a multiple of 21.

As such, the company will need to report stronger revenue and profits to convince investors.  This explains why analysts are not highly excited about the company, with most of them having hold or underweight ratings.

ITW stock price technical analysis

Illinois Tool Works stock chart | Source: TradingView

The daily chart shows that the Illinois Tool Works stock remains under pressure today. However, a closer look shows that it is in the process of forming an inverted head-and-shoulders pattern. It has already completed the formation of the left shoulder and head sections and is now in the right one.

This pattern suggests that it may need to rereat to the right shoulder section of $255 and then bounce back. In the future, the stock may jump to $303, its highest level in February this year.

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NY-headquartered Citigroup has been the perennial laggard of Wall Street for years, burdened by the legacy of the global financial crisis and an unmanageable corporate structure.

However, the narrative has flipped, with a renowned wealth manager, Josh Brown, recently calling Citi “one of the top bank stocks” to own – driven by a profound operational turnaround engineered by CEO Jane Fraser.

By aggressively divesting non-core international consumer operations and removing management layers, the bank has unlocked significant capital efficiency, he told CNBC.

Heading into its Q2 release, Citi shares C are up more than 30% versus its year-to-date low.

Why is Brown bullish on Citi stock

Brown’s bullish view on Citi stock is based on a combination of technical momentum and corporate restructuring.

According to him, the catalyst for change has been Fraser’s “shrinking to grow” strategy – exiting over a dozen overseas retail markets to focus on high-margin corporate services.

Brown particularly favours Citigroup’s global treasury and trade solutions franchise, which serves as the fundamental plumbing of international commerce.

Fraser’s visionary leadership has even helped Citi outperform its larger peers, JPMorgan and Bank of America, in the trailing 12 months.

A healthy 1.72% dividend yield makes Citigroup even more attractive to own in 2026.

Citi shares to rally after Q2 earnings

In the near-term, Citi’s upcoming earnings could prove a tailwind that unlocks the next leg higher.

Expectations are for the investment bank to report $23.4 billion in revenue – up 7.8% on a year-over-year basis – on as much as $2.72 a share of earnings, which will represent 39% growth over last year’s figure.

Crucially, options pricing is bullish heading into the company’s quarterly report. The put-to-call ratio on contracts expiring July 17, just days after the print, sits at 0.42 currently.

And the upper price on those contracts is set at about $145, indicating potential for a 4.2% increase in Citi shares from current levels.

How to play Citigroup at current levels?

Sentiment is structurally supported by the massive $30 billion share buyback program announced at Citi’s May Investor Day.

The aggressive compression of shares outstanding is mechanically lifting the EPS trajectory faster than organic growth alone.

Ultimately, Citigroup’s transformation is proving that sometimes a giant must lean down to leap forward.

By shedding the dead weight of its legacy structure and focusing squarely on its core strengths, the bank has successfully shifted market sentiment from skepticism to strong optimism.

If the upcoming Q2 earnings report validates these aggressive restructuring efforts and meets Wall Street’s heightened expectations, it will solidify the bank’s new trajectory.

For investors who once viewed Citi as a value trap, the combination of technical momentum, a robust buyback program, and disciplined leadership makes the stock a compelling comeback story for the rest of 2026.

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Strategy Inc. MSTR (formerly known as Microstrategy) gained on Friday after Standard Chartered said recent weakness in bitcoin reflects investor uncertainty over the company’s evolving strategy rather than any deterioration in its balance sheet.

In a note, Geoffrey Kendrick, Standard Chartered’s global head of digital assets research, maintained the bank’s end-2026 bitcoin price target of $100,000.

He argued that Strategy’s recent actions have created short-term uncertainty but do not alter bitcoin’s medium-term outlook.

The comments come after Strategy sold 3,588 bitcoin for about $216 million last week, its largest disposal to date, while adopting a Digital Credit Capital Framework that includes a bitcoin monetization program, a USD reserve, share buybacks and preferred stock support.

Strategy shifts away from its “never sell” approach

Kendrick said Strategy appears to be moving beyond its long-held commitment to never selling bitcoin, with investors still trying to understand the implications of that strategic shift.

“Strategy’s actions are muddying bitcoin’s near-term prospects,” Kendrick wrote.

He added that “The company appears to be moving away from its ‘never sell bitcoin’ mantra toward a more complex approach, and clear communication of that pivot will determine how quickly the pressure on bitcoin lifts.”

Strategy currently owns 843,775 bitcoin, representing more than 4% of the total supply that will ever exist.

According to Standard Chartered, the company’s business model has evolved as its market net asset value multiple has declined toward 1.0, limiting its ability to issue shares and buy additional bitcoin under its previous strategy.

Instead, Kendrick said Strategy is increasingly positioning bitcoin as collateral supporting STRC, its perpetual preferred stock that pays a 12% annual dividend.

STRC pricing remains key to bitcoin outlook

Standard Chartered said investor concern intensified after STRC fell well below its $100 par value, reaching an intraday low of $71.25 on June 26 following Strategy’s announcement that it had sold 32 bitcoin the previous week.

The preferred security currently trades around $90, while Strategy holds a USD reserve of $2.55 billion, equivalent to roughly 17.4 months of dividend coverage.

The company has also introduced a bitcoin monetization program that allows it to sell bitcoin from time to time and raise up to $1.25 billion to support reserves, dividend payments, interest obligations, and share repurchases.

Kendrick argued that if investors gain confidence in the framework, Strategy may not need to sell bitcoin at all.

He compared the mechanism to a central bank promising to do “whatever it takes” and, through credibility, avoiding intervention altogether.

He added that STRC remains heavily overcollateralized and should eventually trade back toward its $100 par value.

Analysts divided after bitcoin sale

Strategy’s recent sale of 3,588 bitcoin raised approximately $216 million and came alongside an $8.32 billion digital asset loss reported for the second quarter of 2026.

JPMorgan analysts said formalizing bitcoin sales introduces “avoidable two-way risk” by making Strategy both a buyer and seller of bitcoin.

Grayscale Head of Research Zach Pandl disagreed, arguing the sales strengthen Strategy’s balance sheet and help bitcoin establish a more durable price floor.

Wall Street remains broadly constructive on the stock despite differing views.

Citi maintained a Buy rating and a $260 price target, while Mizuho lowered its target to $213 but reiterated an Outperform rating.

Kendrick said the recent volatility should not change investors’ longer-term outlook.

He described the recent episode as “noise rather than a signal about bitcoin’s medium-term direction,” adding that at current levels bitcoin is “a screaming buy”.

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Nvidia stock (NVDA) traded higher on Friday as investors looked past reports that one of the company’s largest customers is stepping up development of its own artificial intelligence processors.

The stock was up about 2.3% at around $207 at the time of writing after trading lower in premarket activity.

Meta advances custom AI chip efforts

The latest development came after Reuters reported that Meta Platforms plans to begin manufacturing a new in-house artificial intelligence chip from September, citing an internal company memo.

The processor, code-named “Iris,” forms part of Meta’s multi-generation Meta Training and Inference Accelerators (MTIA) program and is intended to support the artificial intelligence systems powering Facebook and Instagram.

According to Reuters, testing of the chip took six weeks and uncovered no major issues, marking progress for an initiative that has faced challenges since it began more than five years ago.

The report said Meta is working with Broadcom on the chip’s design, while Taiwan Semiconductor Manufacturing Co. will manufacture the processors.

Meta’s goal is to lower its computing costs and reduce dependence on third-party chip suppliers by using silicon tailored to its own workloads.

However, Reuters reported that the new chip is intended to augment, rather than replace, the large volumes of graphics processing units Meta continues to purchase from Nvidia and Advanced Micro Devices.

Meta has previously introduced several generations of MTIA chips and has said they could eventually replace GPUs in some servers while expanding into AI training workloads.

To date, custom chips have primarily been used for inference, the process of generating responses from trained AI models.

Competitive pressure continues to build

The report represents another example of a broader trend across the artificial intelligence industry, where major technology companies are increasingly investing in custom silicon to optimize performance and reduce infrastructure costs.

While those efforts have raised concerns about Nvidia’s long-term market share, custom processors have so far complemented rather than displaced the company’s graphics processors in many large-scale AI deployments.

Nvidia continues to dominate the market for AI accelerators, particularly for training frontier models, even as hyperscalers pursue greater control over portions of their computing infrastructure.

Wall Street remains constructive

Morgan Stanley reiterated its Overweight rating and $288 price target on Nvidia following the company’s recent non-deal roadshow with senior executives.

The investment bank said Nvidia conveyed confidence in an accelerating and increasingly diversified growth story that could appeal to both growth- and value-oriented investors.

Morgan Stanley also maintained Nvidia as its top pick within the semiconductor sector.

Earlier this week, TD Cowen reaffirmed its Buy rating and $275 price target after meeting with Chief Executive Officer Jensen Huang, Chief Financial Officer Colette Kress, and Head of Investor Relations Toshiya Hari.

According to the brokerage, Nvidia executives said demand for AI computing infrastructure remains strong, pointing to constrained compute availability, rising rental prices for legacy GPUs, expanding enterprise AI adoption, and cloud agreements signed at premium pricing.

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SoFi stock has rebounded in recent weeks, climbing from its year-to-date low of about $15 to around $19 today. Even so, the shares remain roughly 42% below their all-time high. CEO Anthony Noto has attributed much of the weakness to the broader pullback in fintech stocks. 

With the company’s earnings due later this month, the key question is whether SoFi can extend its recovery or resume its downtrend.

SoFi stock has underperformed the market despite strong growth

SoFi Technology has lagged the market this year, with its stock falling by nearly 30%, while the Nasdaq 100 has jumped by 18%. 

This retreat happened even as the company published strong results and launched new products in its goal to become the go-to app for financial services. It relaunched crypto trading, launched a new stablecoin (SoFiUSD), Coach, a new AI solution offering financial advise, and a new Home Equity Line of Credit (HELOC) solution.

SoFi’s finances have done well this year. Its last financial results showed that its net revenue jumped 41% in the first quarter to $1.1 billion, higher than what analysts were expecting. This growth happened as the number of members jumped 35%, while its products rose 39%. Its new members rose by a record 1.1 million in Q1 to 14.7 million.

Most importantly, the company’s growth is expected to continue in the foreseeable future. Its upcoming results later this month are expected to show that its revenue jumped 30% to $1.12 billion. These are solid numbers for a company in the financial services industry, and one that has not made any major acquisitions recently. 

The annual revenue is expected to jump to $4.68 billion this year followed by $5.78 billion next year. Also, its profits are expected to keep rising, with the earnings per share reaching 59 cents this year, followed by 81 cents next year.

READ MORE: Why Cathie Wood is doubling down on this $18 stock

CEO Noto believes the stock has dipped because of sector weakness

In a CNBC interview this week, CEO Anthony Noto argued that the ongoing SoFi weakness is primarily because of its sector. Indeed, most fintech stocks like PayPal, Shift4 Payments, and Coinbase have all dropped this year.

Another reason is that the company diluted its shareholders earlier this year, raising $1.58 billion by issuing 57.7 million new shares. In total, the company raised over $3.8 billion in six months.

Investors are also questioning SoFi’s business after Muddy Waters published a highly bearish report. It accused the company of inflating the fair value of its loan portfolio, underreporting its losses, and having hidden debt. SoFi denied those allegations. 

Finally, there have been concerns about its valuation, with its forward price-to-earnings ratio being 31, and its PEG ratio rising to 9.12. The company justifies its valuation by using the Rule of 40, which stands at 72%. It was the 18th consecutive quarter of having a score higher than 40%.

SoFi Technologies stock price analysis

SoFi stock chart | Source: TradingView

The daily chart shows that the SoFi stock has jumped from $15 to $18.72 today. It has already crossed the 50-day moving average, while the Relative Strength Index (RSI) has been in an uptrend after bottoming at 21 a few months ago. It stands at 60 today, and the uptrend is continuing. As such, this RSI suggests that it has more upside before it gets to overbought levels.

The risk, however, is that it has slowly formed a rising wedge pattern, which may lead to more downside. In this case, it may be ideal to wait for the stock to cross the upper side of the wedge for confirmation of the bullish breakout. A move above that level will point to more gains towards $25. 

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US stock futures were mixed on Friday as investors paused after a chip-led rally and turned their attention to SK Hynix’s Nasdaq debut.

Dow futures edged higher, but S&P 500 and Nasdaq 100 futures slipped as memory-chip stocks pulled back in premarket trading.

The listing of South Korea’s SK Hynix is a major test of Wall Street’s appetite for AI infrastructure exposure after months of sharp gains and volatility in semiconductor shares.

Middle East tensions also kept investors cautious, with oil and inflation risks still feeding into the Federal Reserve rate debate.

5 things to know before Wall Street opens

1. Futures pause after a strong rally

Dow futures rose 109 points, or 0.21%, while S&P 500 futures were little changed. Nasdaq 100 futures lagged, slipping 0.38%.

The move followed a stronger Thursday session, when the main US indexes gained on renewed demand for chip and AI-linked stocks.

The S&P 500 and Nasdaq remain on track for weekly gains, but Friday’s early tone suggests traders are taking some profit before the next major catalyst.

2. SK Hynix debut tests AI appetite

SK Hynix priced its American depositary receipts at $149 each, raising about $26.5 billion.

The offering is expected to be the world’s second-largest share sale, behind SpaceX’s record listing last month.

AJ Bell analysts see the debut as slightly late in the cycle because memory shares have already pulled back from earlier highs.

Even so, strong demand for the deal suggests investors may view the recent memory-chip weakness as a pause rather than the end of the rally.

3. Memory stocks cool before the open

Semiconductor shares eased in premarket trading, led by memory names. Micron Technology fell 3.2% after a 4.5% gain in the previous session.

Western Digital dropped 2.8%, while Seagate Technology lost 2.7%.

The pullback reflects the market’s broader struggle with AI valuations.

Investors still believe data-centre spending will support chip demand, but they are becoming less willing to chase the sector without fresh earnings confirmation.

4. Middle East risk keeps inflation in focus

Geopolitical risk remains a drag after Iranian forces attacked US military infrastructure in Gulf states, following US strikes on Iran’s southern coastal and eastern provinces.

New York Fed President John Williams said he does not expect Middle East hostilities to cause a lasting rise in energy prices this year, but he avoided saying how he would vote at the July policy meeting.

Markets are still pricing at least one 25-basis-point rate increase by the end of 2026.

5. Earnings season starts to matter

Delta Air Lines reports before the bell, offering an early read on consumer demand and travel pricing. The broader earnings season gathers pace next week.

Analysts expect S&P 500 profits to rise more than 24% from a year earlier, with technology companies driving much of the growth.

That leaves the market with a high bar: AI needs to keep delivering, not just promising.

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Circle shares surged in premarket trading on Friday after the stablecoin issuer announced it had received final regulatory approval from the US OCC to establish a national trust bank.

At the time of writing, Circle shares were up 13.33% in premarket trading.

The regulatory approval allows the company to act as custodian for its own reserves and hold crypto assets on behalf of institutional clients.

OCC approval marks a key milestone

Circle said the final approval enables it to establish Circle National Trust and places the trust bank under the direct oversight of the OCC, the primary federal regulator for lenders and national trust banks.

Commenting on the approval, Circle Chief Executive Officer Jeremy Allaire described the development as a significant step for the digital asset industry.

“OCC approval to establish Circle National Trust marks a defining step in bringing blockchain technology and digital assets into the core of the US financial system,” Allaire said in a statement.

According to the company, operating under a national trust charter will allow it to expand its role in safeguarding digital assets while maintaining direct federal regulatory oversight.

Charter expands custody capabilities

The national trust bank charter allows Circle to serve as custodian for its own reserves, which back its stablecoin operations.

It also permits the company to hold crypto assets on behalf of institutional clients.

The approval comes as digital asset companies continue to broaden their presence in traditional financial services.

As regulatory hurdles have eased over the past year, firms in the sector have increasingly pursued banking licenses, custody businesses, and payment services.

The move reflects a broader effort by crypto companies to integrate more closely with regulated financial infrastructure while expanding their service offerings.

USDC remains a major stablecoin

Circle is the issuer of USDC, a dollar-pegged stablecoin designed to maintain a fixed value through a 1:1 peg with the US dollar.

Stablecoins are widely used within the cryptocurrency market to transfer funds between crypto tokens while minimizing price volatility.

Their fixed-value design makes them a commonly used medium for transactions across digital asset platforms.

Stock gains despite year-to-date decline

Friday’s rally follows a challenging year for Circle’s stock.

Despite the sharp premarket gains, the company’s shares had fallen 20.5% so far this year through the previous market close, according to LSEG data.

The decline had left Circle with a market capitalization of approximately $15.7 billion before Friday’s trading session.

Investors appeared to welcome the OCC’s final approval, sending the stock sharply higher as the market reacted to the company’s expanded regulatory status and new custody capabilities.

The approval gives Circle the authority to operate its national trust bank under direct federal supervision while broadening its role in providing custody services for both its reserves and institutional crypto clients.

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London’s FTSE 100 edged higher on Friday, supported by strong gains in Vodafone and easyJet following major corporate developments.

However, renewed tensions in the Middle East continued to weigh on investor sentiment, limiting broader market gains.

The blue-chip FTSE 100 index rose 0.08% to 10,480.31 points by 1053 GMT.

Meanwhile, the mid-cap FTSE 250 gained 0.1%.

Despite the modest advances, both indexes remained on track to record weekly losses.

Vodafone jumps after a major stake sale agreement

Vodafone emerged as the top performer on the FTSE 100, with its shares rising 12.6%.

The gains came after UAE telecommunications group e& announced that it would sell its stake in the British telecom company to the family investment vehicle of French billionaire Xavier Niel.

The transaction was valued at nearly $6 billion.

The announcement boosted investor confidence and helped lift the broader benchmark index despite cautious market sentiment.

easyJet leads FTSE 250 higher on takeover approach

Shares of easyJet climbed 14.5%, making it the strongest performer on the FTSE 250.

The budget airline said it had agreed in principle to a £5.7 billion ($7.65 billion) takeover approach from Apollo Global.

The proposed deal lifted sentiment across the travel and leisure sector, which rose 1.6% and led sectoral gains during the session.

The takeover news added to the day’s corporate activity, providing support for UK equities even as geopolitical concerns remained in focus.

Mining stocks advance alongside the broader market

Industrial metal miners also posted gains during the session.

The sector rose 0.8%, with Atalaya Mining, Antofagasta, and Rio Tinto advancing between 1.4% and 1.8%.

The gains in mining stocks further contributed to the positive performance of the UK’s main equity indexes.

Middle East tensions cap broader market gains

Despite the rally in several major stocks, investor sentiment remained cautious.

Renewed tensions in the Middle East weighed on markets after Iranian forces attacked US military infrastructure in Gulf states.

The development further undermined a three-week-old ceasefire and increased uncertainty surrounding the direction of the conflict.

The geopolitical uncertainty prevented stronger gains across the broader market, keeping investors cautious despite positive corporate news.

Financial stocks under pressure

Investment banks and brokerages declined 0.8%, making them among the weakest-performing sectors during the session.

St. James’s Place was one of the biggest fallers on the FTSE 100, dropping 8.7%.

The decline followed a report that Sovereign Wealth, one of the money manager’s largest partner firms, was in discussions to join a Swedish wealth management group.

Hays rises after upbeat profit outlook

Recruitment company Hays gained 13.8% after issuing a positive earnings outlook.

The company said it expects its annual operating profit to come in at the top end of market expectations.

According to the company, the improved outlook was supported by ongoing cost-cutting measures and higher consultant productivity.

The update was well received by investors and helped lift the stock sharply during Friday’s trading session.

Political developments remain in focus

On the political front, Andy Burnham moved closer to becoming Britain’s next prime minister after securing overwhelming backing from Labour lawmakers.

The support places Burnham in a strong position to succeed Keir Starmer, adding a political dimension to a session otherwise dominated by corporate deal activity and geopolitical developments.

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SK Hynix’s blockbuster US listing is already spawning a new wave of leveraged investment products, with several exchange-traded fund issuers preparing to launch products tied to the South Korean memory-chip maker’s American depositary receipts (ADRs), a move that analysts say could increase volatility in one of the world’s hottest AI stocks.

According to a Bloomberg report, ProShares, Leverage Shares, and Rex Shares are among the issuers planning leveraged and inverse exchange-traded products that will track SK Hynix’s newly listed ADRs.

At least six such products are expected to begin trading next week, according to information published on the issuers’ websites.

The launch comes after SK Hynix raised about $26.5 billion by pricing 177.9 million American depositary shares at $149 apiece, marking one of the largest US listings by a foreign company and underscoring investor appetite for companies benefiting from the artificial intelligence infrastructure boom.

Leveraged products arrive after a record debut

The introduction of leveraged products would allow investors to magnify their daily gains or losses from movements in SK Hynix shares.

Some products are designed to deliver twice the daily return of the underlying stock, while others aim to generate inverse returns for investors betting on declines.

The products mirror investment vehicles that have become hugely popular in South Korea and Hong Kong, where leveraged bets on SK Hynix have attracted billions of dollars in assets.

Bloomberg noted that one leveraged SK Hynix product issued by CSOP Asset Management in Hong Kong has grown into the world’s largest single-stock leveraged ETF, managing more than $16 billion before the recent correction in the company’s share price.

How leveraged products have played a role in the chip stock boom in S. Korea

Analysts say the rapid rise of leveraged single-stock products has already altered trading patterns in South Korea.

SK Hynix, Samsung Electronics, and leveraged products linked to the two companies now account for more than 70% of total trading value on South Korea’s $4.3 trillion equity market, contributing to sharp swings in the benchmark Kospi index.

“Some elements of retail activity appear to be increasingly momentum-driven, with growth in single-stock ETFs boosting trading volumes and volatility in mega-cap names,” said John Cho, Korea equities portfolio manager at JPMorgan Asset Management in the Bloomberg report.

“The emergence of leveraged ETFs is not viewed as a healthy sign, as it may be indicative of late-cycle retail behavior.”

South Korean investors have shown strong enthusiasm for leveraged semiconductor products this year.

According to the South China Morning Post, leveraged ETFs tracking SK Hynix and Samsung Electronics were the two most-purchased investment products by South Korean investors during the first five months of 2026, attracting cumulative investments of $311.8 million and $211.1 million, respectively, based on Korea Securities Depository data.

The country’s market for single-stock leveraged ETFs has expanded rapidly since launching in late May.

As of this week, the combined market capitalisation of 14 leveraged ETFs tracking Samsung Electronics and SK Hynix had reached 13.02 trillion won ($8.63 billion), while cumulative trading value exceeded 212 trillion won during their first month.

Why leveraged ETPs in the US could increase volatility

Market participants say the growing popularity of leveraged products could create fresh challenges as issuers rebalance their portfolios daily to maintain targeted returns.

The growing concentration of money in single-stock leveraged products has started influencing the price movements of the underlying shares themselves.

The launch of additional leveraged exchange-traded products (ETPs) in the US is expected to increase daily portfolio rebalancing activity, potentially adding to already elevated volatility.

Bloomberg Intelligence also noted that the sheer size of these products has made it harder for issuers to consistently deliver twice the daily returns of the underlying stock, resulting in tracking errors.

“US investors may encounter the same tracking challenges” seen in Hong Kong’s leveraged product tracking SK Hynix, said Rebecca Sin, ETF analyst at Bloomberg Intelligence.

“When demand significantly exceeds available inventory, ETP issuers can face difficulties sourcing shares and maintaining effective hedges, potentially leading to tracking errors versus the underlying stock.”

The Bank of Korea has also warned that leveraged single-stock ETFs could amplify volatility through mandatory daily rebalancing of spot and futures positions, increasing concentration risks in underlying stocks.

Those concerns have sparked criticism from some policymakers, with at least one opposition lawmaker reportedly calling for the products to be delisted.

With SK Hynix now firmly established on Wall Street following its record ADR offering, analysts expect the launch of leveraged US products to further increase global trading activity around one of the AI industry’s most closely watched semiconductor companies.

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