BlackRock, the world’s largest asset manager, on Monday upgraded its outlook for U.S. stocks to overweight, seeing upward momentum carry on as inflation eases. The financial giant, which oversees more than $9 trillion in assets, said the initial stock rally centered around the excitement over artificial intelligence has the potential to broaden out. BlackRock also said solid economic growth and cooling price pressures bolstered the market’s rosy macro outlook. “Inflation will likely near the Fed’s 2% target this year, and the Fed is set to start cutting interest rates,” Jean Boivin, head of BlackRock Investment Institute, said in a note. “So we upgrade broad U.S. stocks – our index level view plus AI theme preference – to overweight on a tactical horizon of six to 12 months.” .SPX 1Y mountain S & P 500 Tech stocks drove the S & P 500 to record highs last week as investors cheered solid economic data, which raised hopes that the U.S. could skirt a recession. Gross domestic product increased at a 3.3% annualized rate in the fourth quarter of 2023, crushing the Wall Street consensus estimate for a gain of 2%. BlackRock said corporate earnings and profit margins have held up against higher interest rates and costs so far. Investors are closely monitoring earnings reports this week from the so-called Magnificent Seven names — Alphabet, Apple, Amazon, Meta Platforms and Microsoft. Still, BlackRock said it expects an “inflation rollercoaster” ahead. While the firm sees inflation falling near the Fed’s 2% target, it expects prices to go up towards 3% next year. “We stay nimble as we expect resurgent inflation to become clear later this year,” BlackRock said. “We agree with markets that inflation will fall near 2% this year, helping the upward momentum extend into the year. Yet inflation is unlikely to stay there in the long run.” The firm said wage growth in the U.S. is still running too hot for services inflation to slow enough to keep core inflation near…
2024-01-29 11:38:00
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