The S&P 500 is outperforming the Nasdaq 100, and that’s not going to change: Traders

The S&P 500 has been outpacing the Nasdaq 100 this year, and two traders believe the trend will continue.

Erin Gibbs, equity chief investment officer at S&P Global, points out that the current global outlook and a low interest rate environment have caused investors to turn to the more defensive in their stock selection.

"I think we're looking at this global deflationary environment for at least another quarter if not two and we're seeing investors prefer the more defensive stocks," she said Friday on CNBC's "Power Lunch." "As long as the U.S. market is the best house in a bad block and we keep looking for more of these defensive stocks, particularly with the Brexit [vote] coming up, I think we're going to continue to see this trend of the S&P 500 outpacing."

The S&P is up 1 percent this year through Friday's close, while the Nasdaq 100 is down nearly 5 percent. The Nasdaq 100 is largely composed of big-cap tech stocks, while the S&P has a larger representation of names that are less levered to economic strength and to investor risk appetites. Within the S&P, the best-performing sectors are utilities and telecom services, both of which tend to be defensive, yield-sensitive plays.

"All the higher beta names you'd like to see leading in a global market are not," Todd Gordon of TradingAnalysis.com said Friday on "Power Lunch." "So provided the Fed continues to remain dovish, rates on hold, those staples and utilities and dividend payers will continue to outperform."

If he is right, investors will be better off in an S&P 500-tracking ETF like the SPY, rather than a Nasdaq 100 tracker like the QQQ.


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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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