Expected US rate cuts have investors looking beyond Big Tech
NEW YORK -Looming U.S. interest rate cuts are presenting investors with a tough choice: stick with the Big Tech stocks that have driven returns for more than a year or turn to less-loved areas of the market that could benefit from easing monetary policy.) has been a hugely profitable strategy for investors since early 2023, even as the stocks' market dominance has drawn comparisons to the dot-com bubble of the late 1990s.
Small caps and the equal-weight S&P 500 extended their gains on Friday even as tech stocks rebounded. Smaller companies, including biotech firms, that are heavily dependent on credit are among those that stand to benefit most from lower rates, said Matthew McAleer, president and director of private wealth at Cumberland Advisors. Industrial companies, which can rely on debt for capital intensive projects, also could be winners, McAleer said.
Many are skeptical that investors will stay away from shares of megacap companies, which are expected to be more resilient in uncertain economic environments. Big Tech could be an appealing destination if the U.S. economy starts to weaken more than expected after months of elevated interest rates, said Chuck Carlson, chief executive officer at Horizon Investment Services.
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