New S&P year-end target, energy sector rally: Monday's market takeaways

As US Equities (^GSPC, ^DJI, ^IXIC) have begun to lose steam following last week's historic highs, Yahoo Finance Reporter Josh Schafer joins the Live show to break down Monday's top market takeaways.

Schafer highlights Oppenheimer's upgraded call for the S&P 500, having already reached the previously forecast 5200 less than three months into the year. He also discusses the energy sector's rally over the last month and bitcoin's (BTC-USD) rise back over the 70,000 threshold.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Nicholas Jacobino

Video Transcript

AKIKO FUJITA: Well, stocks losing steam heading into the close declines across the board. Josh Schafer is here with the takeaways. More upside to the S&P.

JOSH SCHAFER: More upside to the S&P, Akiko, was one of the broader takeaways I had from today's market action. And that's based on some equity strategy that came out today. John Stoltzfus over at Oppenheimer upgrading his call for the S&P 500 to end this year at 4,500. Sorry, 5,500, not 4,500. We're not going down that far. 5,500.

He had previously called for 5,200. And interesting because he was one of the most bullish strategists on the street coming into this year at 5,200. And everyone sort of wondered he says now he felt like a lot of the investors their clients said is that too optimistic, is 5,200 a little too bullish here, John?

Well, we hit it less than three months into the year. And we really hit most of Wall Street's targets. And what was interesting in his note, and he told us this earlier when he came on air with us, he said he thinks the risks are largely to the upside here.

And the fact that he wrote directly in the note, we acknowledge the possibility that we might need to raise the price target again later this year. Should our economic and market outlook prove too conservative? And I think this is just a little bit of a trend we're seeing guys in largely every economic metric over the last year.

It feels like consensus has continued to come up with it. We've seen projections continue to come up. You could say a similar story for earnings, too. Earnings projections while they often fall as we get closer.

Largely, the story has been one of an upward trend. And it seems like across the street right now, people are sort of wondering, OK, are we just going to keep going to the upside where the downside risk and sort of weighing those?

AKIKO FUJITA: Is it all about the Fed ultimately? I mean, is that the clarity coming through from the Fed that's going to push things further?

JOSH SCHAFER: It seems like the clarity from the Fed is part of the broadening argument. So those that are in the broadening camp feel like they might need more clarity from the Fed for some of those interest rates sensitive sectors to join this rally more. But Stoltzfus largely argues, well, earnings have held up to this point with restrictive rates.

At some point, why should I keep wondering if they're not going to hold up? Like the take that rates are going to eventually compress companies, hurt margins, and hurt earnings hasn't really played out overall. So, at some point, why should we just keep waiting for that?

And I think that's sort of the argument makes sense. Of course, there are always those risks to the downside. But it's been interesting to see some of these areas that these strategists are watching pick up today like we saw with energy.

That's my other takeaway, Josh. I read you. I read you. I had to take a break. Energy.

JOSH LIPTON: Energy. Yes.

JOSH SCHAFER: Energy. We're going to bring in. We're going to talk about. Energy led today overall. Another led the sectors.

And we've been seeing that trend for a while now, guys. And I just wanted to highlight this because it's interesting when you look over the last month, how much energy has outperformed. Energy is up 8.5% over the past month.

The next closest sectors materials. That's up about 5%. And nothing else is up more than 3%.

What's interesting about this is energy's rally, it's one of the only four sectors outperforming the S&P 500 this year. It's basically all in the last month. It's been totally ripping over the last month.

Part of this has come as we've seen commodity prices rise. But I brought a chart from Mike Wilson over at Morgan Stanley who upgraded energy to overweight today. And what's interesting, he points out, look at the divergence you're seeing in energy's relative performance, the sector versus Brent crude oil.

Normally, they would kind of trade together. And you would see energy start to pick up and trade closer to Brent crude. And that just hasn't been something we've seen. So that's sort of why they think there's maybe more room to run in that trade.

AKIKO FUJITA: Yeah, you also wonder how much valuations have fallen. When you think about where it's been last year is this just, is this that trade?

JOSH SCHAFER: Right. Yeah, and will it pick back up. Because it's one of the sectors that has significantly lagged when you zoom out to like a six-month picture. Energy is up 3%. And the leading sectors are up over 20%.

So it hasn't really played into the rally thus far. But one other thing we've got to highlight. That did play into the rally. Bitcoin over 70,000 again.

JOSH LIPTON: First time since last week.

AKIKO FUJITA: Yeah.

JOSH SCHAFER: Jared Blikre did tell me, though, it is Bitcoin's best 24-hour performance tracked on Yahoo Finance in the last year. So it's its best day. It's hard to track Bitcoin as a day because it never stops trading.

But we're seeing the best 24-hour action on the crypto in the last year. Guys, the thing that stands out to me here is just we saw Bitcoin come down. We follow these prices every day.

And we saw it come down a little bit. In the crypto trade come down a little bit last week. And I sort of thought, OK, maybe we're stepping out of the Bitcoin moment for a second again now. And we're not going to talk about it every day.

And then MicroStrategy goes up over 10% today and Bitcoin is up also almost 10. And it's like it's just not going away.

JOSH LIPTON: Yeah, the story last week, I remember we were talking about was just money getting yanked out of the New spot Bitcoin ETFs. That was the narrative. It looks like today, at least, investors are willing to shrug that one off.

JOSH SCHAFER: Yeah, it seems like the interest itself from investors isn't going anywhere. You wonder at what point does the price get bid up. And sort of just crypto goes through these moments where people get excited about it. And then sort of it just falls by the wayside. And we stop talking about it for a month.

AKIKO FUJITA: Suddenly, the 100,000 call by the end of the year doesn't seem so off.

JOSH SCHAFER: No, it's just--

AKIKO FUJITA: Like end of last year 100,000.

JOSH SCHAFER: Right.

AKIKO FUJITA: Here we are at the end of March.

JOSH SCHAFER: And it's one of those things that as David Hollerith and I highlighted in the story. We did on crypto price targets. I mean, it's just a price-driven. It's just demand.

And so if demand keeps coming back to the market here, then the price goes up. There's no real fundamental story to be told about Bitcoin largely. So if we keep seeing investor demand, then perhaps the price keeps ticking higher. And we keep talking about it.

JOSH LIPTON: All right, and now, the halving in April. Halving.

JOSH SCHAFER: Oh, I'm excited for that. Josh, the halving. I mean, we're going to have a whole day on that.

JOSH LIPTON: When you say halving. Do you feel like a Lord of the Rings character?

AKIKO FUJITA: Halving. Halving.

JOSH SCHAFER: I got to look into this having more so we can talk about.

AKIKO FUJITA: I'm going to have you back on to talk about the halving.

JOSH SCHAFER: Yes, next half.

JOSH LIPTON: Thank you, Josh.