Faced with the pressure of the Federal Reserve (Fed) to start raising interest rates, the stock market is still in a sell-off quagmire recently. However, both JPMorgan Chase and Citigroup have seen the opportunity to buy at the bottom, believing that the market has overreacted to interest rate hikes, and the economic Still solid, but will continue to fluctuate as liquidity gradually converges.
JPMorgan strategist Marko Kolanovic believes that risk assets are overreacting to the Fed’s December meeting minutes, and monetary policy may be tightened gradually and at a speed that the market can handle. This occurs in a strong economic cycle recovery environment. Factors show that now is the time to enter the layout.
Kristen Bitterly, head of American capital markets at Citi, said that among the Nasdaq 100, 38 stocks have fallen more than 20% from their 52-week highs, and 65 stocks have fallen more than 10%. Stocks are expected to earn double-digit returns. The Nasdaq 100 fell nearly 4.5% in the first week of the year.
Kolanovic said that while rising interest rates have put pressure on high-value stocks, as the economy continues to expand, raising interest rates will not completely destroy the bull market. In addition, the Omicron virus may be the end of the epidemic, and the mild disease accompanied by high contagiousness has made the epidemic worse. Gradually turning into an endemic disease, which is expected to boost economic growth in the second quarter, the market remains optimistic.
Looking ahead to this year, Kolanovic continues to be bullish on economically-sensitive value stocks, which now have relatively low net earnings or market value, rekindling hopes for a stock rotation. Bitterly is bullish on high-quality companies in industries such as cybersecurity and payments, and expects earnings growth in these industries to continue.
Bitterly believes that the upcoming fourth-quarter earnings season in the coming weeks will provide support for the market, as U.S. stocks are expected to record record earnings and corporate earnings forecasts are also expected. However, Bitterly said market volatility will continue in the near term as the Fed’s fight against inflation means higher interest rates and sliding liquidity.