NEW YORK - As the bull market gets a new lease on life, Wall Street is growing less fretful of a U.S. growth slowdown and betting on shares of companies in sectors that will benefit from the economic up-cycle, such as industrials and financials.
Accordingly, fears of a stock market meltdown have given way to talk of a possible melt-up. The S&P 500 has notched record highs in the past three trading sessions. “Part of the reason for the slowdown has been trade,” he said. “You’re likely to see a rebound in demand for products from industrial companies as you see a pickup in the economy.”
Another cyclical sector, financials, has not had the same resurgence as industrials this year, but some investors believe that economic conditions could soon boost those shares as well. “U.S. banks have corrected much faster in terms of balance sheet size than European banks, and yields will likely continue to climb on the prospect of higher growth,” he said.
That run could be extended, some believe, as investors who remain on the sidelines put more money into stocks. Despite this year’s gains, investors have largely poured money into bond funds at the expense of equity funds.U.S.-based equity mutual funds posted $3.64 billion of cash withdrawals in the week ended April 24, extending their weekly outflows since mid-February, according to Lipper. Conversely, bond funds, which include taxable and municipal debt funds, brought in a net $8.
So many sophisticated people talking about the inverted yield curve
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