BlackRock rebuts "Sell in May" strategy: Fed stance and stock buyback frenzy to boost US stocks
BlackRock's Chief Global Investment Strategist believes that the Fed's stance and the stock buyback frenzy will boost the US stock market, and investors should continue to stay in the stock market in May. Chairman Powell's speech dispelled market concerns about policymakers raising interest rates, with rate cuts still being discussed. In addition, several large companies have announced stock buyback plans. The labor market may become less tight, related to service sector inflation. The S&P 500 index has already risen by nearly 3% in early May
According to the Zhitong Finance and Economics APP, after experiencing a sell-off in April, the S&P 500 index rose at the beginning of May, with a nearly 3% increase so far this month. Meanwhile, Wei Li, Chief Global Investment Strategist at BlackRock (BLK.US), the world's largest asset management company, has expressed opposition to the well-known Wall Street saying "Sell in May and go away".
Wei Li believes that investors should stay in the stock market in May for reasons including: the Fed's fight against "higher for longer"; although the labor market remains strong, it may become less tight; a wave of stock buybacks, not just happening in well-known large companies.
Regarding the first reason mentioned by Wei Li, it refers to Fed Chairman Powell's speech last week, which essentially dispelled market concerns that policymakers would raise interest rates to cool stubborn inflation. In addition, Powell also stated that a rate cut is still under discussion, but the timing of the rate cut will be later than expected due to inflation not yet returning to the 2% target.
Apple (AAPL.US) announced the largest buyback plan in history last week, with a buyback size of $110 billion. Other companies that have announced stock buyback plans this year include Disney (DIS.US), Meta Platforms (META.US), Uber (UBER.US), and Airbnb (ABNB.US).
Wei Li also mentioned that "less tight" labor market conditions include lower wages, lower job creation, and fewer job vacancies. He pointed out that this is related to service sector inflation