2021-03-23 • Updated
Let’s discuss the future of the well-known stocks: Amazon, Apple, Facebook, Google, and Microsoft, that form FAANG group. Investors call it differently: Tech Giants, Big Five, or S&P 5. These five companies are the largest and most powerful ones in the technology industry of the United States.
All these companies benefited from the social distancing restrictions and stay-at-home regime amid the Covid-19. Will they keep rallying up amid the global recovery? Probably not. A strong economic rebound isn't looking so welcome for Big Five. The time comes for the companies which were hit hard by the pandemic.
The $1.9 trillion stimulus package raised expectations for near-term inflation as it would boost spending. As a result, investors started questioning when the Federal Reserve would slow its asset purchases and increase interest rates.
The bond market was the first to react. The 10-year Treasury yield surged above 1.6%, the high unseen for over a year! Higher returns from Treasuries tend to impact negatively Tech Giants. That led to a so-called "reopening trade": reopening stocks that dropped at the beginning of the coronavirus quickly changed into investors’ favorites. We can already observe the rotation from FAANG to value and cyclical stocks.
The term ‘cyclical’ refers to a stock in which business generally follows the economic cycle of growth and recession. In other words, cyclical stocks are rising in times of economic expansion but falling during recessions and market instability. Examples of cyclical stocks are below.
The travel and hospitality industries: Booking, TripAdvisor, Royal Caribbean.
Automakers: Ford, General Motors.
Banks: JPMorgan, Goldman Sachs, and Bank of America.
Value stocks represent companies that are undervalued: they were traded at a lower price relative to their economic indicators, such as dividends, earnings, or sales. Let’s go through the most popular values stocks these days.
AT&T: a telecom giant, which is trading at less than 9.5 times this year's expected earnings.
Berkshire Hathaway: its CEO is Warren Buffett! A conglomerate of more than 60 businesses and a massive stock portfolio.
Procter & Gamble: a consumer products manufacturer. A mother of well-known brands like Gillette, Tide, and Bounty.
Johnson & Johnson: a healthcare giant, which is famous for its consumer healthcare products. By the way, it has created an effective vaccine to fight the Covid-19 virus.
The current pressure on FAANG shouldn’t lead the group to record lows. The falling would last just in the short term. Morgan Stanley said: "the bull market continues to be under the hood, with value and cyclicals leading the way. Growth [FAANG] stocks can rejoin the party once the valuation correction and repositioning is finished."
The good news for FBS traders is that they can make both buy and sell trades. So a trader doesn’t need to hold already an asset to sell it. Thus, traders have a chance to profit in case of either outcome.
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The past two years have seen the biggest swings in oil prices in 14 years, which have baffled markets, investors, and traders due to geopolitical tensions and the shift towards clean energy.
After months of pressure from the White House, Saudi Arabia relented and agreed with other OPEC+ members to increase production.
More and more analysts are sure Brent oil will surpass $100 a barrel. So how heavily will oil move the markets, and what will the direction of the movement be? Let's find out!
The past several weeks have been a real triumph for the bulls in the oil market. The Brent spot price grew by 8.5% during the last month.
Gold prices are rising for three consecutive days ahead of the Federal Reserve (Fed) interest rate decision, which is expected to remain unchanged due to declining inflation and a positive economic outlook. Investors are keen on the Fed's interest rate guidance, fearing a hawkish stance that could trigger market risk aversion.
Amid concerns of a Chinese economic slowdown, reports of declining investment often overlook China's efficient investment strategy in emerging sectors for long-term growth. China has taken measures to stabilize foreign and private sector investments, like reducing the reserve requirement ratio to boost investor confidence.
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