The market is undergoing a shakeup, and stocks rooted in the"old economy" are going to be the winners of the new cycle, according to Bank of America.
But not all sectors will feel the pain of higher interest rates this year, the BofA strategists said, noting that most of the damage has been inflicted on tech and growth stocks. Those areas of the market benefited from huge amounts of capital in previous years, and are now struggling as financial conditions tighten. Meanwhile, the opposite is playing out for old economy stocks.
That's supported by the fact that the strong economic indicators, like a robust labor market, have seemingly"The consensus narrative shift from 'hard landing' to 'soft/no landing' should translate to recession risk being priced out of sectors that were pricing in the biggest risk ," the note said.