The average stock may be about to up its game - Cresset
Main U.S. indexes red: Dow off most, down ~1%
Healthcare leads S&P 500 sector gainers; Tech weakest group
Dollar up slightly; bitcoin up ~4%; gold off <2%; crude off >2%
U.S. 10-Year Treasury yield rises to ~4.24%
Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com
THE AVERAGE STOCK MAY BE ABOUT TO UP ITS GAME - CRESSET
In the midst of surging prices in early 2022, the Fed embarked on its most aggressive rate-hiking campaign in 40 years.
Now, however, with the rate environment expected to evolve in the second half of this year, Jack Ablin, chief investment office and founding partner at Cresset, is taking at look at what the implications are for investors.
Ablin notes that rate hikes have been particularly harsh on the most leveraged companies as investors piled into a handful of mega-cap tech stocks that not only generate generous cash, but also benefit from the AI boom.
Despite some false signals early in the year, Ablin says that investors are now pricing in lower rates thanks to subsiding inflation and a slowing labor market.
"We expect equity leadership to reverse as Fed easing comes closer into view. That’s because lower short-term rates will ease borrowing conditions, and companies, sectors and markets with the highest debt to EBITDA will benefit the most. Moreover, fundamentals are beginning to favor the average stock in the S&P," writes Ablin in a note.
Ablin says that over the last 18 months, the Magnificent 7 stocks have dominated earnings growth – providing more than 50% growth for three straight quarters – while profit growth contracted for the rest of the S&P 500.
However, Ablin says the earnings growth differential between the Mag 7 and the rest of the index is now expected to converge as borrowing costs ease, "creating a catch-up catalyst."
Therefore, Cresset expects lower rates will usher in a broader equity market, as most disadvantaged companies, sectors and markets over the last 18 months close the performance gap with the mega-cap market leaders.
Given their outsized representation in the cap-weighted S&P 500 Index, Ablin thinks it’s possible that the average stock could advance against a backdrop of an index pullback, a situation that he says occurred between 2000 and 2001 when the S&P 500 declined nearly 20%, while the average stock gained nearly 8%.
(Terence Gabriel)
*****
FOR FRIDAY'S EARLIER LIVE MARKETS POSTS:
JAPAN DISHOARDED TREASURIES IN YEN DEFENSE - CLICK HERE
INDIVIDUAL INVESTOR OPTIMISM HIGHEST SINCE DECEMBER - AAII - CLICK HERE
U.S. STOCKS MIXED AND MESSY EARLY - CLICK HERE
'TRUMP 2.0' COULD MUDDLE EM-FRIENDLY FED CUTS - CITI - CLICK HERE
S&P 500 INDEX: A QUICK GOODBYE TO THIS WEEK'S RECORD HIGHS - CLICK HERE
THE BOE'S NEWEST RATE SETTER COULD HOLD THE DECIDING VOTE - CLICK HERE
UK TO BENEFIT FROM TECH ROUT, IMPROVING MACRO - CLICK HERE
BEIJING MAY HAVE TO ACCEPT LOWER GROWTH - CLICK HERE
SHARES DIP, CYBER OUTAGE IN FOCUS - CLICK HERE
Aloqador aktivlar
Eng oxirgi yangiliklar
Javobgarlikdan voz kechish: XM Group korxonalari har biri faqat ijro xizmatlarini koʻrsatadi va onlayn savdo platformamizdan foydalanish huquqini beradi, bu odamga veb-saytda yoki veb-sayt orqali mavjud boʻlgan kontentni koʻrish va/yoki undan foydalanishga ruxsat beradi hamda uni oʻzgartirishga moʻljallanmagan va uni oʻzgartirmaydi yoki kengaytirmaydi. Bunday kirish va foydalanish huquqi doimo quyidagilarga boʻysunadi: (i) Shartlar va qoidalar; (ii) Risklar haqida ogohlantirish; va (iii) Javobgarlikni toʻliq rad etish. Shuning uchun bunday kontent umumiy maʼlumot sifatida taqdim etiladi. Xususan, shuni esda tutingki, bizning onlayn savdo platformamiz mazmuni moliyaviy bozorlarda biror bitimni amalga oshirishga oid maslahat yoki taklif emas. Har qanday moliyaviy bozorda savdo qilish sizning kapitalingiz uchun jiddiy risk darajasini oʻz ichiga oladi.
Onlayn savdo platformamizda chop etilgan barcha materiallar faqat taʼlim/axborot maqsadlari uchun moʻljallangan va unda moliyaviy, investitsiya soligʻi yoki savdo maslahatlari va tavsiyalar; yoki bizning savdo narxlarimizning qaydlari; yoki har qanday moliyaviy vositalar bilan bitim tuzish maslahati yoki taklifi; yoki sizga kerak boʻlmagan moliyaviy reklama aksiyalari hisoblanmaydi
Har qanday uchinchi tomon kontenti, shuningdek XM tomonidan tayyorlangan kontent, masalan: fikrlar, yangiliklar, tadqiqotlar, tahlillar, narxlar va boshqa maʼlumotlar yoki bu veb-saytda joylashgan uchinchi tomon saytlariga havolalar umumiy bozor sharhi sifatida "boricha" taqdim etiladi va investitsiya maslahatini tashkil etmaydi. Har qanday kontent investitsiya tadqiqoti sifatida talqin qilinsa, siz bunday kontentni investitsiya tadqiqotlarining mustaqilligini ragʻbatlantirish uchun moʻljallangan qonun talablariga muvofiq moʻljallanmagan va tayyorlanmaganligini eʼtiborga olishingiz va qabul qilishingiz kerak, shuning uchun unga tegishli qonunlar va qoidalarga muvofiq marketing kommunikatsiyasi sifatida qaraladi. Mustaqil boʻlmagan investitsiya tadqiqoti va yuqoridagi maʼlumotlarga oid risk haqida ogohlantirishimizni oʻqib chiqqaningizga va tushunganingizga ishonch hosil qiling, unga bu yerdan kirish mumkin.
