NEW YORK, April 9 — Some investors are looking for bargains in beaten-down growth and tech stocks, betting they will shine as the Federal Reserve fights to slow the US economy and tame red-hot inflation.
Underpinning those moves is the perception that the Fed’s fight against inflation will keep interest rates climbing, eroding the future cash flows that growth stocks are heavily valued on. Value stocks, meanwhile, have found support from a strong economy and surging commodity prices. “If these recession fears grow, then you are going to have a big shift away from value stocks,” said Esty Dwek, chief investment officer at FlowBank, who has been increasing her stake in technology stocks. “Sustainable earnings growth will become more important again.”
Earnings season kicks off next week, giving investors a closer look at how companies have fared at a time of heightened geopolitical uncertainty and rising commodity prices. Mayukh Poddar, a portfolio manager of Altfest Personal Wealth Management, has increased exposure to growth stocks in healthcare such as Boston Scientific and mega-cap tech names like Microsoft in anticipation that the Fed’s hawkish tilt will slow the economy, hurting value stocks.
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