There's a fight playing out right now among investors in the U.S. stock market on which way economic growth is heading. As you’ll see in the numbers below, it's a fair fight right now from a performance perspective. But we think that's going to change very soon.
(For more, click here to get 3 specific trading ideas from this morning's Early Look.)
Breaking down the S&P 500 year-to-date performance by sectors reveals this emerging conflict:
- Financials (XLF): +5.2%
- Utilities (XLU): +5.5%
- S&P 500: +6.2%
As a reminder, the Utilities sector outperforms the broader stock market when U.S. economic growth slows and interest rates fall. On the other hand, Financials outperform the broader stock market when U.S. economic growth accelerates and interest rates rise.
Investors placed bets last week that were crystal clear. Interest rates fell and here's what happened in Utilities and Financials:
- Financials (XLF) were down -1.3% week-over-week
- Utilities (XLU) were up +0.5% week-over-week
Which side of this fight are you on? U.S. #GrowthAccelerating or U.S. #GrowthSlowing...
In today's Early Look, Hedgeye CEO Keith McCullough explains which side we’re on, why we’re on it and how investors can take advantage of this emerging fight.
In fact, we've got three specific ideas.
Click here to learn more.