Cindy Ord
Markets are heading into June motion with main inventory averages (SP500)(COMP:IND)(DJI) not far off document highs, and Fundstrat International Advisors Managing Associate Tom Lee stated this week traders shouldn’t stray from belongings which have gained floor up to now in 2024.
“Buyers have been hesitant all 12 months and I feel we’ve got had some quick pullbacks, however I feel the very best technique for traders is to essentially follow what’s working,” Lee informed CNBC in a tv interview this week. He has stated there’s cash to place to work within the markets. Greater than $6T in money is parked in cash market funds, in accordance with Federal Reserve information.
Lee stated what’s working in equities are AI-related names similar to Nvidia (NVDA) and extremely correlated shares like Tremendous Micro Laptop (SMCI). “Ozempic-related trades,” are additionally doing nicely, referring to drugmakers that make widespread weight-loss therapies.
Shares of AI chipmaker Nvidia (NVDA) have shot up 121% this 12 months amid the AI funding frenzy and the corporate’s robust Q1 outcomes and steerage. AI server firm Tremendous Micro (SMCI) has climbed 176% within the first 5 months of the 12 months. Shares of Ozempic maker Novo Nordisk (NVO) and Zepbound producer Eli Lilly (LLY) have jumped 31% and 40%, respectively.
The commercial (XLI) and monetary (XLF) sectors are performing nicely, as is bitcoin (BTC-USD) and the cryptocurrency’s proxies, Lee stated.
Features in small-cap shares (RTY) (IWM) are sharply lagging these for large-caps (SP500) (SPY)(QQQ) this 12 months, however there’s a “rising small-cap stealth rally,” Lee stated. Small-caps have been stung by shrinking odds the Federal Reserve will ship a hefty quantity of fee cuts this 12 months, however that does not strip away their “basic attractiveness,” he stated.
“Earnings progress is near 19%, the median Russell 2000 (RTY) inventory and the median P/E is 11 instances – so that you’re getting much better earnings progress than the S&P (SP500) and a a lot decrease P/E a number of,” the strategist stated.
The Russell 2000 (RTY) has risen 2% this 12 months, versus the S&P 500 (SP500) advance of almost 11%.
Fundstrat’s year-end S&P 500 (SP500) goal of 5,200 is “too low,” contemplating the potential for S&P 500 EPS progress to $280 subsequent 12 months, Lee stated. “I feel we’re nonetheless simply deciding whether or not or not there’s a pace bump between June and December,” he stated.
Listed here are some ETFs to trace main inventory averages: (IVV), (VUG), (IWO), (SH) and (SRTY).
