Contrary to broader market outflows, Bank of America Corp. strategists report that investors are once again favoring the stocks that led the market rally in 2023. Growth, technology, and the “AI bubble” are capturing traders’ attention, along with the so-called Magnificent Seven group of stocks, including Apple Inc. These equities, which led the Nasdaq 100 index’s impressive 54% surge last year, are experiencing renewed interest amidst a settling 10-year Treasury yield range of 3.75% to 4.25%.
While the overall US stock market saw redemptions of $4.3 billion in the week ending January 17th, technology stock funds witnessed their largest two-week inflow since August, attracting $4 billion in investments according to EPFR Global data. Notably, Nvidia Corp., Microsoft Corp., and Meta Platforms Inc., members of the Magnificent Seven, have emerged as the top point gainers on the tech-heavy gauge, driving it to record highs.
Bank of America strategists predict that this trend will persist until the Treasury yield range is broken. They anticipate investors will continue to shy away from banks, real estate investment trusts (REITs), small-caps, and leverage. Furthermore, market sentiment will depend heavily on the path of Federal Reserve policy, with strategists pointing out that investors are anticipating a decrease in the Fed funds rate.
In a global context, Bank of America strategist Michael Hartnett notes that the Nikkei 225 benchmark stock index is benefiting from traders’ preference to allocate funds anywhere but China. Japanese stocks are attracting investor attention, especially given that investors are still underweight on Japanese equities. EPFR Global data reveals that Japanese stock funds experienced their largest inflow in 12 weeks during the period ending January 17th.
In contrast to the rising appeal of technology stocks, European equity funds witnessed outflows of $1 billion. On the other hand, bond funds garnered significant interest, amassing $14.1 billion in investments.
With economic uncertainties persisting, investors are reevaluating their investment strategies and gravitating toward technology stocks that have previously delivered substantial gains. Time will tell whether this renewed enthusiasm for growth stocks will be rewarded or if market dynamics will introduce new challenges for investors.
FAQs:
1. What stocks are investors favoring according to Bank of America strategists?
– Bank of America strategists report that investors are favoring growth, technology, and the “AI bubble” stocks, including the Magnificent Seven group of stocks such as Apple Inc.
2. Which stocks led the Nasdaq 100 index’s surge in 2023?
– The Magnificent Seven group of stocks, including Apple Inc., led the Nasdaq 100 index’s impressive 54% surge in 2023.
3. What is the current range of the 10-year Treasury yield?
– The 10-year Treasury yield has a range of 3.75% to 4.25%.
4. What were the inflows for technology stock funds according to EPFR Global data?
– According to EPFR Global data, technology stock funds witnessed their largest two-week inflow since August, attracting $4 billion in investments.
5. Which stocks have emerged as the top point gainers on the tech-heavy gauge?
– Nvidia Corp., Microsoft Corp., and Meta Platforms Inc., members of the Magnificent Seven group of stocks, have emerged as the top point gainers on the tech-heavy gauge.
6. Which sectors are investors expected to shy away from?
– Bank of America strategists anticipate investors will continue to shy away from banks, real estate investment trusts (REITs), small-caps, and leverage.
7. What will market sentiment depend heavily on?
– Market sentiment will depend heavily on the path of Federal Reserve policy, with investors anticipating a decrease in the Fed funds rate.
8. Why are Japanese stocks attracting investor attention, according to Bank of America strategist Michael Hartnett?
– Bank of America strategist Michael Hartnett notes that Japanese stocks are benefiting from traders’ preference to allocate funds anywhere but China. Additionally, investors are still underweight on Japanese equities.
9. What were the inflows for Japanese stock funds during the period ending January 17th?
– Japanese stock funds experienced their largest inflow in 12 weeks during the period ending January 17th.
10. What were the trends for European equity and bond funds?
– European equity funds saw outflows of $1 billion, while bond funds garnered significant interest, amassing $14.1 billion in investments.
Key Terms:
– Magnificent Seven: Refers to a group of stocks, including Apple Inc., that led the Nasdaq 100 index’s surge in 2023.
– AI bubble: Refers to the fascination and investment focus on Artificial Intelligence-related technology companies.
– Treasury yield range: Refers to the range within which the 10-year Treasury yield fluctuates, currently between 3.75% and 4.25%.
– Federal Reserve policy: Refers to the monetary policy decisions and actions taken by the Federal Reserve to control interest rates and stabilize the economy.
– Nikkei 225: A benchmark stock index that represents the performance of 225 major Japanese companies listed on the Tokyo Stock Exchange.
Suggested Related Links:
– Bank of America
– Nasdaq
– U.S. Department of the Treasury
– Federal Reserve System
The source of the article is from the blog zaman.co.at