Market broadening favors value and industrials
The panel argued that falling yields, lower commodity prices, and multiple compression in mega-cap tech are driving a sustainable rotation into equal-weighted indexes, industrials, and value stocks.
The argument
Mike Coe noted that while tech has experienced frothy multiple expansion, older industrial and dividend-paying companies trade at attractive valuations under 15 times forward earnings. Steve Grasso added that lower rates and oil prices particularly benefit small-cap stocks with floating-rate debt.
The thesis, stress-tested
✓ What validates it
- ✓Equal-weight S&P 500 continues to outperform the market-cap weighted index
- ✓Inflows into value and industrial ETFs rise over the next quarter
▸ Risks discussed
- ▸A sudden reversal in the Fed's rate path could pressure floating-rate debtors
- ▸Tech earnings could surprise to the upside and pull capital back
Hear it yourself
"Plus, the next move in biotech after a blowout week, SpaceX, it falls out of orbit, and can Nike regain its footing after a soulless year so far. Options traders are setting up ahead of those results. I am Frank Holland in for Melissa Lee coming to you live from Studio B at the Nasdaq. On the desk tonight, we have Tim Seymour, Courtney Garcia, Steve Grasso, and Mike Coe. We start off with text week to forget the Nasdaq riding a five day losing streak into the weekend as long as downstretched since all the way back in January."
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