As stocks come under pressure ahead of the highly anticipated Big Tech earnings week, FS Investments Chief Market Strategist Troy Gayeski joins The Morning Brief to discuss the implications for investors.
Gayeski attributes the sell-off to "stronger economic growth, leading to stronger inflation," which has resulted in the pricing out of expectations for Federal Reserve rate cuts. However, he notes that "there’s nothing really disastrous in terms of fundamentals."
With the earnings season in full swing, Gayeski believes divergence will emerge as the main theme. He pointed to the fracturing of the once-cohesive "Magnificent Seven" group of tech giants, with names like Tesla ( TSLA) and Apple (AAPL) falling behind, while Nvidia ( NVDA) and Microsoft (MSFT) continue to thrive. Gayeski characterizes this divergence as "a healthy development for markets."
When asked about how investors should position their portfolios amid the sell-off, Gayeski emphasizes that "the biggest challenge for investors right now isn’t necessarily should they rotate more risk into the Magnificent Seven or megacap tech; it’s how to put the massive cash hoards to work that they’ve built."
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