US-based brokerage Charles Schwab highlights that the influence of artificial intelligence will extend into various sectors of the market, while the influential tech companies' stocks continue to remain attractive to investors.
AI will expand into sectors including communication services, healthcare, and industrials, areas that it views positively, said the company on Wednesday.
The broker noted that while the Magnificent Seven still looks fine in absolute performance terms, but maybe not as much in relative terms.
This is due to the expected earnings growth rates for the coming quarters and the year remain higher than the rest of the market but are expected to decelerate over time. However, "opposite is happening for the other 493", said Kevin Gordon, head of marco research and strategy schwab center for financial research.
Besides, he mentioned that while the unemployment rate did recently roll back over and inflation has remained relatively sticky, maybe June is when the Fed starts cutting again, and not be "an aggressive cutting cycle".
The firm also anticipates a gradually weaker dollar which "disproportionately does tend to benefit emerging markets", including China and Japan.
"There's still a big overhang from a lot of the property issues in China in terms of how much that did affect the average consumer," said Gordan. But at the same time, there is a fiscal stimulus element at play and is not just a phenomenon in China but happening around the world, he said.
