Looming U.S. interest rate cuts are presenting investors with a tough choice: stick with the Big Tech stocks that have driven returns for more than a year or...
NEW YORK - Looming U.S. interest rate cuts are presenting investors with a tough choice: stick with the Big Tech stocks that have driven returns for more than a year or turn to less-loved areas of the market that could benefit from easing monetary policy.
"The trade got too one-sided and we're seeing some reversal of this," said Walter Todd, chief investment officer at Greenwood Capital. Smaller companies, including biotech firms, that are heavily dependent on credit are among those that stand to benefit most from lower rates, said Matthew McAleer, president and director of private wealth at Cumberland Advisors. Industrial companies, which can rely on debt for capital intensive projects, also could be winners, McAleer said.
"If we can start to stall ... I think you're going to see better breadth across multiple areas in the equity market," McAleer said. "You could see ... a broadening of stock buying," Meckler said. "But I think as long as the AI thesis is dominating the market, it's going to be difficult for these stocks to drop significantly."The S&P 500's year-to-date gains have been concentrated in stocks like Nvidia and Microsoft, and analysts have warned that any weakness in them could hurt the major indexes.
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