The trifecta market tests this week versus this years top-performing S&P500 stocks

Jessica Amir joined discussion · Apr 8 03:47

Markets will be tested this week for a trifecta of reasons this week.

Firstly, the US economy continues to steam train ahead (just look at the stellar US jobs report), so bets of a Fed rate cut in June continue to be eroded, while bets of those cuts in September in July continue to reduce. This dynamic could continue this week if we see US CPI (released 10 April) blow hotter than expected as well as producer prices (PPI) the next day (11 April). Secondly, first-quarter corporate earnings results begin to be released, with results out from banks including JPMorgan Chase, and Citigroup due on Friday. Thirdly, volatility in oil markets and stocks is picking up, with oil supply shortfalls continuing, while geopolitical issues remain cloudy.

For markets, if inflation (CPI and PPI) blows hotter, we could see volatility rise (as measured by the VIX), which is already above its 200-day moving average, and stocks could take a haircut. While those quality names will likely see buying if they pull back.

For the broad market watch S&P500 ETFs SPY $SPDR S&P 500 ETF(SPY.US)$ and IVV $iShares Core S&P 500 ETF(IVV.US)$ and for the ASX, VAS $Vanguard Australian Shares ETF(VAS.AU)$ for example. Also, you could expect profits to be taken from those interest-sensitive names, many of which are this year's best performers, Super Micro Computer $Super Micro Computer(SMCI.US)$ (which is +233% YTD), Nvidia $NVIDIA(NVDA.US)$ (is up 77% YTD), Meta $Meta Platforms(META.US)$ is up 48%.

Also watch other top YTD S&P500 performers; General Electric $GE Aerospace(GE.US)$ (+53%) as a beneficiary of geopolitical issues, Constellation Energy $Constellation Energy(CEG.US)$ + 65% as a beneficiary of the nuclear energy push, as well as NRG Energy $NRG Energy(NRG.US)$ +41%. Also watch oil and gas names, Marathon Petroleum $Marathon Petroleum(MPC.US)$ +47% YTD, Valero Energy $Valero Energy(VLO.US)$ +41%.

Source: moomoo, Bloomberg

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Jessica Amir

Moomoo Official Market Strategist

Investment strategist. I dissect markets and share investment opportunities. I am featured on TV & radio etc

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