Investing.com – “Following the latest data on the progress of the United States economy, the Federal Reserve (Fed) faces significant challenges in achieving its 2% inflation target, following the solid performance of the economy and At the upcoming Federal Open Market Committee (FOMC) meeting on June 12, the Fed is unlikely to change its guidance on future rate cuts given the lack of confidence in the sustainability of the current ‘disinflationary’ path. “.
This is how emphatic Javier Molina, senior market analyst for eToro, is when analyzing the challenges of the market this week.
Molina highlights that, in this environment, investors should consider several strategies:
- Diversification: Maintaining a diversified portfolio can help mitigate the risks associated with rate volatility and economic uncertainty.
- Long-term investments: Against a backdrop of potential interest rate stability, long-term investments in strong sectors can offer attractive returns.
- Attention to Fed Communications for the aforementioned.
“This being the case, do not expect rate cuts because the Federal Reserve faces a complex panorama with significant challenges to achieve its inflation objectives, which generates an environment of uncertainty and a clear willingness not to touch rates,” says Molina.
Pay attention to the ‘AI Big 10’
“On the other hand, and under the name of the ‘AI Big 10’, we find the ‘Magnificent 7’ stocks minus Tesla (NASDAQ:) and Apple (NASDAQ:), to which are added Broadcom (NASDAQ: ), Qualcomm (NASDAQ:), AMD (NASDAQ:), Applied Materials (NASDAQ:) and Micron (NASDAQ:). These are the companies with which to position yourself in Artificial Intelligence to achieve broad exposure,” says the expert from eToro.
“Another thing are the multiples paid for that. In any case, while the S&P 500 rises 12% YTD, if we subtract the “magnificent 7” it remains at 4.9% and if you now subtract the ‘AI Big 10 ‘This increase is only 3.6%,’ he adds.
“This last group of 10 stocks account for 28% of the total capitalization of the S&P 500, going from 5 billion 16 months ago to the current 13 billion dollars. In that period, the income of these 10 companies has doubled. We will continue to observe whether expectations regarding its price continue to diverge from reality,” concludes Molina.
How to continue taking advantage of market opportunities? Take advantage HERE AND NOW the opportunity to get the InvestingPro annual plan for less than 9 euros per month. Use the code INVESTINGPRO1 and get 40% off your 1-year subscription. Less than a Netflix subscription costs you! (And you also get more out of your investments.) With this you will achieve:
- ProPicks: AI-managed stock portfolios with proven performance.
- ProTips: assimilable information to simplify a large amount of complex financial data into a few words.
- Advanced Stock Finder: Find the best stocks based on your expectations, taking into account hundreds of financial metrics.
- Historical financial data for thousands of shares: So that fundamental analysis professionals can delve into all the details themselves.
- And many other services, Not to mention those we plan to incorporate in the near future.
Act fast and join the investment revolution! GET YOUR DEAL HERE!
