Apple’s weak momentum is one reason why the S&P 500 tech sector entered correction territory, and why Ned Davis Research lowered its view on big tech.
The Federal Reserve-induced sell-off in technology stocks has traders dusting off their turmoil playbooks. Trouble is, one of the most popular strategies isn’t working: hiding out in Apple.
“It has a lot going for it in this environment: it is gigantic, offers pretty predictable growth and cash flow in an uncertain world, and it is a very high-quality company that doesn’t have much debt,” said Jack Ablin, chief investment officer at Cresset Capital. “Its fundamentals are so solid that it is basically the Treasury of the equity market.”Advertisement
In such a scenario, investors should aim for resilience, according to Chris Haverland, a global equity strategist at the Wells Fargo Investment Institute. “We believe maintaining a quality bias in portfolios is appropriate given our view that an economic recession is likely in the coming quarters,” he wrote. Large-cap US stocks “lead all other equity classes in quality characteristics” like profitability, earnings stability, and balance-sheet strength.
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