<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="It may be time to hit pause on the red-hot big cap tech trade of 2020 fueled by names such as Zoom (ZM) and Advanced Micro Devices (AMD) and take a ride on some less exciting industrial and utilities stocks.” data-reactid=”16″>It may be time to hit pause on the red-hot big cap tech trade of 2020 fueled by names such as Zoom (ZM) and Advanced Micro Devices (AMD) and take a ride on some less exciting industrial and utilities stocks.
Well, perhaps movers of dirt and sellers of electricity are more exciting investments than one thinks if listening to the new pitch from strategists at Goldman Sachs. The investment bank lifted its outlook on the industrials and utilities sector on Wednesday, citing a host of reasons to get long in a space that had fallen out of favor amidst the COVID-19 pandemic.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="“Industrials should benefit from improving global economic growth and potential infrastructure spending while Utilities’ dividend yield relative to the level of interest rates is near a 25-year high,” writes Goldman’s Arjun Menon. Goldman is looking for 5.6% global GDP growth in 2021, which would be vastly improved from the 5% plunge expected this year.” data-reactid=”18″>“Industrials should benefit from improving global economic growth and potential infrastructure spending while Utilities’ dividend yield relative to the level of interest rates is near a 25-year high,” writes Goldman’s Arjun Menon. Goldman is looking for 5.6% global GDP growth in 2021, which would be vastly improved from the 5% plunge expected this year.
The Dow Transports have come on strong.
Menon adds, “Improving global economic growth and low interest rates should also be tailwinds to select cyclical and defensive pockets within the equity market. Within cyclicals, stocks that are most positively correlated with global economic growth should see their businesses normalize faster than companies that are more tied to the domestic economy. Among defensives, low interest rates mean total cash return yields will likely be a key determinant of performance through the remainder of this year.”
Goldman retained its overweight recommendation on information technology, citing attractive fundamentals. It continues to hold bearish views on health care, real estate, energy and materials.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Only until recently have more cyclical areas of the market begun to catch bids. So if anything, Goldman’s upgrade lends validity to a move in markets that hasn’t gotten a ton of attention. Prior to Wednesday’s session, the Dow Jones Transportation Average had risen for 10 straight sessions. The index has quietly outperformed the S&P 500 and Nasdaq Composite this past month (see chart above), according to Yahoo Finance Premium data.” data-reactid=”32″>Only until recently have more cyclical areas of the market begun to catch bids. So if anything, Goldman’s upgrade lends validity to a move in markets that hasn’t gotten a ton of attention. Prior to Wednesday’s session, the Dow Jones Transportation Average had risen for 10 straight sessions. The index has quietly outperformed the S&P 500 and Nasdaq Composite this past month (see chart above), according to Yahoo Finance Premium data.
Not everyone on Wall Street is sold just yet on Goldman’s call.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="“We want to see if it’s more sustainable. If you look at historical cycles, once the economy truly starts to recover it is all about getting cyclical — or the stocks that got beaten down the most during the decline. They tend to rally. Normally we would have seen it by now. Because it’s such a unique recession, we haven’t seen it yet. So eventually, yes, it will be the big trade probably over the next 12 to 18 months,” Ned Davis Research chief U.S. strategist Ed Clissold told Yahoo Finance’s The First Trade.” data-reactid=”34″>“We want to see if it’s more sustainable. If you look at historical cycles, once the economy truly starts to recover it is all about getting cyclical — or the stocks that got beaten down the most during the decline. They tend to rally. Normally we would have seen it by now. Because it’s such a unique recession, we haven’t seen it yet. So eventually, yes, it will be the big trade probably over the next 12 to 18 months,” Ned Davis Research chief U.S. strategist Ed Clissold told Yahoo Finance’s The First Trade.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.” data-reactid=”35″>Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
TORONTO – Canada’s main stock index was little changed in late-morning trading as the financial sector fell, but energy and base metal stocks moved higher.
The S&P/TSX composite index was up 0.05 of a point at 24,224.95.
In New York, the Dow Jones industrial average was down 94.31 points at 42,417.69. The S&P 500 index was down 10.91 points at 5,781.13, while the Nasdaq composite was down 29.59 points at 18,262.03.
The Canadian dollar traded for 72.71 cents US compared with 73.05 cents US on Wednesday.
The November crude oil contract was up US$1.69 at US$74.93 per barrel and the November natural gas contract was up a penny at US$2.67 per mmBTU.
The December gold contract was up US$14.70 at US$2,640.70 an ounce and the December copper contract was up two cents at US$4.42 a pound.
This report by The Canadian Press was first published Oct. 10, 2024.
