Global stock markets are expected to experience a significant boost this week, extending beyond mega-cap tech stocks, according to the information shared with Finbold by Nigel Green, CEO and founder of deVere Group, one of the world’s largest independent financial advisory, asset management, and fintech organizations.
According to Green, mega-cap tech stocks such as Apple (AAPL), Microsoft (MSFT), Nvidia (NVDA), Amazon (AMZN), Meta (META), Tesla (TSLA), and Alphabet (GOOGL) have accounted for approximately 90% of Wall Street’s S&P 500 index gains this year. However, Green believes that if the Federal Reserve indeed pauses rate hikes this week, other sectors that have been underperforming in 2023 could experience a much-needed boost.
Green emphasized:
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“Despite a stubbornly robust labor market and persistent inflation, the markets now expect the world’s most influential central bank to pause its interest rate hike agenda this month.” He further states, “This will firmly signal that progress is being made in the battle to cool inflation, and this will buoy investors across the board, finally providing a boost to sectors which have been unloved so far this year.”
Last week, Green cautioned investors against relying solely on the hype surrounding tech giants, or the Magnificent Seven. He stated:
“The volume is getting louder, and the frenzy is reaching fever pitch. This hype is dangerous as it could lead investors to assume that these stocks are a silver bullet to build long-term wealth – and they are not, at least not on their own.”
Diversification is key
While acknowledging the importance of including mega-cap tech stocks in investors’ portfolios due to their solid fundamentals and future-focused nature, especially in artificial intelligence (AI), Green underlined the need for diversification. According to the deVere CEO:
“Diversification remains investors’ best tool for long-term financial success. As a strategy, it has been proven to reduce risk, smooth out volatility, exploit differing market conditions, maximize long-term returns, and protect against unforeseen external events.”
The comments from Green regarding a potential market rally come as stocks experienced a slight uptick last Thursday, pushing Wall Street into a new bull market.
The S&P 500 index rose by 0.6%, reaching a point 20% above the low it hit in October. This milestone signifies the index’s recovery from the challenging bear market, which saw a drop of 25.4% over approximately nine months. The Dow Jones Industrial Average also climbed by 0.5%, while the Nasdaq composite led the market with a 1% rise.
Green concludes by advising investors to act smart and closely monitor the market to indicate the potential opportunities if the Federal Reserve, as widely expected, decides to pause interest rate hikes this week.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
