Shares of ProShares UltraPro Short QQQ (SQQQ), an exchange-traded fund (ETF) designed to deliver three times the inverse daily performance of the Nasdaq-100 Index, surged 5.02% in pre-market trading on Wednesday. This significant uptick comes in the wake of disappointing U.S. economic data that has sparked concerns about the health of the tech sector.

The catalyst for SQQQ's pre-market rally appears to be the release of the advance estimate for U.S. GDP growth in the first quarter of 2025. According to the report, the economy contracted by 0.3% on a quarter-over-quarter basis, falling short of economists' expectations of 0.3% growth and marking a sharp decline from the previous quarter's 2.4% expansion. This unexpected economic contraction has raised fears of a potential slowdown in the tech-heavy Nasdaq-100 index, which SQQQ is designed to inversely track.

Investors often turn to inverse ETFs like SQQQ as a hedging tool or to express bearish views on the market. The fund's leveraged nature means it can deliver amplified returns when the Nasdaq-100 declines, as appears to be the expectation following this weak GDP print. However, it's important to note that leveraged and inverse ETFs are designed for short-term trading and can be volatile. Traders and investors should exercise caution and understand the risks associated with these products, especially in light of rapidly changing economic conditions.