Liz Ann Sonders, Chief Investment Strategist at Charles Schwab, breaks down market moves and explains why inflation is likely to stay sticky near 3 percent amid affordability pressures and tight labor supply.
US stocks extended losses, as a selloff in technology shares dragged global gauges from the brink of record highs. Bond yields climbed.
The Nasdaq 100 was down 1.3%. Broadcom Inc. dropped after its sales outlook fell short of lofty expectations. The S&P 500 sagged after the index notched a record close in the previous session. The Dow Jones Industrial Average pulled back from record highs. Treasury 10-year yields advanced to 4.18%.
Traders “are searching for alternative real assets, especially given the Federal Reserve rate cut and the possibility of more to come,” wrote Richard Hunter, head of markets at Interactive Investor. “The rotation also provides something of a hedge for investors, where concentration risk among the ‘Magnificent Seven’ in particular was becoming more of an issue.”
Diversification across geographies and themes is becoming a key consideration. After technology heavyweights drove equity gains for much of the year, concerns about stretched valuations and vast capital outlays have prompted investors to look for opportunities elsewhere.
“Given the set-up in markets, diversification is now the price worth paying to keep you fully invested in equities,” wrote Goldman Sachs’s Mark Wilson. He adds that there are compelling investment stories including Korea, Japan, China or the broader emerging markets.
Meanwhile, strategists at Goldman Sachs Group Inc. expect stocks to notch fresh records next year, citing resilient economic growth and broader adoption of artificial intelligence to support corporate earnings.
The team led by Ben Snider reaffirmed its target for the S&P 500 to reach around 7,600 points in 2026, implying gains of about 10% from current levels. Other forecasters and asset managers share the upbeat view, with strategists at firms including Morgan Stanley, Deutsche Bank AG and RBC Capital Markets LLC also calling for US stocks to rise more than 10%.
Market forecasters are broadly positive on Europe as well, with not a single one of the 17 strategists surveyed by Bloomberg expecting a major decline. Four strategists, including those at UBS Group AG and Deutsche Bank AG, project gains of nearly 13% from Wednesday’s close.
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