It’s been risk-on the past few months as investor confidence returns, putting safety on the back burner. As such, growth names are back in vogue on the stock market while safe-haven sectors may languish as economic prospects improve.
Of course, that could all change if the market responds negatively to further rate hikes. The expectation is that the U.S. Federal Reserve will eventually scale back the pace of its rate hikes, but other than the Fed members themselves, only a fly on the wall in the Fed’s policy meetings knows what they will do.
In the meantime, big tech is back in a big way with the Nasdaq 100 gaining about 14% so far one month into 2023. Traders looking to capture more of the upside and growth with big tech can take a look at the Direxion Daily Technology Bull 3X ETF (TECL).
Traders have the opportunity to supercharge their profits with its triple leverage, but TECL is certainly not for the weak of heart. Per its fund description, the fund seeks 300% of the daily performance of the Technology Select Sector Index, which includes domestic companies from the technology sector.
Utilities Can Still Shine
As stated, nobody knows what the Fed will do so they could reverse course and raise rates at an accelerated rate if they still feel inflation is not in their control. That said, safe havens like the utilities sector can still shine though the sentiment is risk-on currently.
There are different schools of economic thought with regard to a recession: a hard landing or a soft landing. Of course, the Fed is hoping to propel interest rate policy to a point where the latter takes place.
“I think the characteristics of this recession are likely to be different than prior ones,” said Gregory Daco, the chief economist at Ernst and Young’s EY-Parthenon consulting group. He cited two reasons: the state of household finances, like healthy savings rates and relatively low levels of debt, and the demand for labor, which continues to be resilient.
“So we have not seen the type of severe pullback we usually see at the onset of a recession, where businesses look to cut costs rapidly,” he added in the CNBC report. “So the pullback is likely to be softer and more gradual than in the past. We’re not going to see broad-based layoffs.”
That said, traders can play the upside in utilities with the Direxion Daily Utilities Bull 3X Shares (UTSL). The fund seeks daily investment results equal to 300% of the daily performance of the Utilities Select Sector Index. That extra juice from the triple exposure could amplify profits and growth should the utilities sector roar back in 2023, especially if a safe haven scramble takes place if the U.S. economy enters a recession — soft landing or not.
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