Morgan Asset Management: This year, the "Magnificent 7" of the US stock market have performed exceptionally well, and it is expected that this trend will spread to other industries in the future.
The future upward trend of the US stock market is expected to spread from the "Big 7" (Apple, Microsoft, Alphabet, Amazon, Nvidia, Tesla, Meta) to other industries.
According to the Zhongtong Finance APP, Lee Spelman, the head of US stocks at Morgan Asset Management, said that although the yield on 10-year US Treasury bonds has reached 5%, technology stocks are still performing well. Similar to the 1990s, technology stocks performed well under high interest rates. In addition, the US economy may not necessarily enter a recession, and the future upward trend of US stocks is expected to spread from the "Big 7" (Apple, Microsoft, Alphabet, Amazon, Nvidia, Tesla, Meta) to other industries.
Lee Spelman pointed out that the yield on US Treasury bonds has generally remained at a level of 5% to 6% over the past 40 years, so the current level of bond yields will not have a significant impact on the stock market. This year, the "Big 7" of US stocks have performed outstandingly, partly due to market concerns that the US economy may enter a recession. Since technology stocks have a low correlation with the macro economy, they have attracted capital inflows. Unless bond yields rise significantly, the risk of the US economy entering a recession will not increase.
Lee Spelman stated that the current interest rates have actually returned to the normal level of the 1990s. The near-zero interest rate environment of the past 15 years is not normal. If interest rates hover at the current level or slightly decrease, the economic environment will be healthier. The "Big 7" of US stocks dominate their respective fields, and it is believed that this situation will continue until new disruptors emerge. It is unlikely that such a situation will occur in the next 18 to 24 months. However, the "Big 7" of US stocks have recently undergone adjustments, and it is recommended that investors broaden their horizons to other sectors of US stocks, such as healthcare stocks that have a large amount of innovation and attractive valuations.