U.S. tech giants have been leading the market recovery from March lows as investors viewed them as key winners from lockdowns. However, the Nasdaq 100 Index has fallen since reaching a peak in September on concerns about frothy valuations. Last week saw its worst sell-off in seven months after Apple Inc.s iPhone sales and Twitter Inc.s user growth both missed estimates.
The rotation in market leadership would stem from an economic recovery and possible positive news on the pandemic, according to JPMorgan. The strategists said techs outperformance could stall if bond yields start rising next year, even though their earnings and balance sheet fundamentals remain supportive. Banks and insurance stocks would in turn benefit from a pick-up in bond yields.
[More: Value stocks could shine after the election]
A clear outcome for the election would be a positive for equity investors, according to JPMorgan, as the market could then focus on fiscal stimulus measures. A contested result would lead to selling, they say, while recommending buying any weakness on a three- to six-month horizon.
And although a blue wave of Democratic wins and concerns over unfriendly market policies could also pressure stocks, the strategists say, they would see this as a chance to add to portfolios on bets of increased fiscal stimulus, a weaker U.S. dollar, steeper yield curve and easing trade uncertainty. While Matejkas team is overweight U.S. and China stocks, which have outperformed Europe and emerging markets this year, they see this trend possibly changing in 2021.
U.S. leadership has been consistent with growth outperforming value, and tech outperforming banks. This might not continue in 2021, they write.
[More: Advisers address clients market jitters as election anxiety runs high]
The post JPMorgan prepares for post-election market shift by cutting tech appeared first on InvestmentNews.
We're here to help. Send us an email or call us at +1 (585) 329-9661. Please feel free to contact our experts.
A donation will be made by Adviser First Partners to a Veterans organization on behalf of all financial professionals and firms that register each month
Contact Us© 2024 Adviser First Partners. All Rights Reserved.
Web Design by eLink Design, Inc., a Kentucky Web Design company