As of late, inflationary dread has been pervading market sentiment, with speculation of escalating costs and an imminent market slump. Nevertheless, the S&P 500 has defied the odds and has seen a 5% growth year-to-date. This fascinating upturn in earnings can be attributed to the unwavering performance of the largest American corporations, who have managed to navigate their way through the stormy macro-economic waters. This article aims to delve into the drivers of the S&P 500’s unexpected upswing and unveil how traders can take advantage of this evolving scenario.
Catalysts Behind S&P 500’s Growth in the Face of Inflation Anxiety
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Corporate Earnings Stand Their Ground
Despite the headwinds brought by the challenging economic landscape, the behemoth American corporations have adeptly maintained their earnings. These corporates have achieved this by trimming expenses, boosting efficiencies, and honing in on their core competencies. This exceptional agility has enabled them to keep surging forward, notwithstanding the mounting inflationary pressures and soaring interest rates.
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Sanguine About the Fed’s Inflation Control
The investor community remains optimistic that the Federal Reserve will be able to steer inflation under control without having a deleterious effect on corporate earnings. This optimism is reflected in the current neutral position of the Fear and Greed Index, indicating that market sentiment is balanced, and investors’ greed and fear levels are both in check.
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ETFs Open up New Trading Horizons
Despite the continued market volatility precipitated by the Federal Reserve’s monetary policy, astute traders can still profit by tactfully playing both the upside and downside through the use of ETFs such as Direxion Daily S&P 500 Bull 3X Shares ETF (SPXL) and Direxion Daily S&P 500 Bear 3X ETF (SPXS) during a sideways trading pattern.
China’s Economy Bounces Back, Paving the Way for Profitable Trading Opportunities
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China’s Ambitious Growth Plan
China’s central bank is committed to supporting the stable and healthy growth of the country’s economy. To attain this, China has set a challenging goal of achieving 5% economic growth, a target that is further compounded by the COVID-19 pandemic, a flagging tech industry, and a troubled real estate market.
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Traders Can Leverage China’s Economic Recovery
To capitalize on China’s economic resurgence, traders can explore the Direxion Daily FTSE China Bull 3X ETF (YINN), which tracks the FTSE China 50 Index. The fund is currently trading below the 50- and 200-day moving averages, presenting a possible trading opportunity for traders to profit from. In the event of the trade going the opposite direction, traders can still utilize the Daily FTSE China Bear 3X Shares (YANG) to mitigate losses.
In Conclusion
In spite of the mounting anxiety over rising inflation and interest rates, the S&P 500 has witnessed an unexpected upsurge of 5% year-to-date. This can be attributed to the exceptional performance of the largest American corporations and investors’ sanguine outlook that the Federal Reserve will be able to keep inflationary pressures under control without denting corporate earnings. Traders can tap into this burgeoning market growth by skillfully using ETFs to play both the upside and downside during a sideways trading pattern. Furthermore, China’s economic recovery presents traders with a unique opportunity to profit from by investing in ETFs such as the Direxion Daily FTSE China Bull 3X ETF (YINN) or the Daily FTSE China Bear 3X Shares (YANG). As market conditions remain unpredictable, it is crucial for traders to exercise caution and conduct thorough research before investing in any ETFs or other financial instruments.
In summary, the current macro-economic headwinds have not deterred the S&P 500 from growing 5% year-to-date, thanks to the exceptional performance of the largest American corporations and investors’ confidence in the Federal Reserve’s ability to manage inflation without negatively impacting corporate earnings. Traders can take advantage of this market growth by leveraging ETFs to play both the upside and downside during a sideways trading pattern. Additionally, China’s economic recovery presents a unique opportunity for traders to invest in ETFs such as the Direxion Daily FTSE China Bull 3X ETF (YINN) or the Daily FTSE China Bear 3X Shares (YANG) to profit from the country’s ambitious economic growth target.
