Benzinga - by Benzinga Neuro, Benzinga Staff Writer.
The Chief Investment Officer (CIO) of a Swiss bank has indicated a significant shift in the market dynamics, suggesting that the bull run of big U.S. tech stocks is about to experience a downturn.
What Happened: Bank Syz CIO Charles-Henry Monchau told CNBC that a “healthy” rotation phase has commenced, and major U.S. tech stocks are set to feel the heat.
The “magnificent seven” stocks — Apple Inc. (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOGL), Meta Platforms (NASDAQ:META), Microsoft (NASDAQ:MSFT), Nvidia (NASDAQ:NVDA), and Tesla (NASDAQ:TSLA) — collectively represent about 30% of the S&P 500’s market cap.
The market faced a challenging start to 2024. The S&P 500 snapped a nine-week winning streak, particularly due to the underperformance of mega-cap tech stocks, especially Apple.
Monchau projected a “technical recession without going through a hard landing” in the first half of the year. A recovery will follow, he said.
The market is exhibiting signs of a broadening of the bull market, he noted. Sectors that lagged in 2023, such as financials, energy, and healthcare, are now showing promise.
Monchau attributed last week’s market weakness to a moderation of the excessive “euphoria” that drove the late 2023 stock market surge.
Why It Matters: Monchau’s views coincide with those of Scott Wren, the senior global market strategist at Wells Fargo. Wren also anticipates a shift towards more cyclical asset classes and sectors better positioned for an economic recovery later in the year.
This prediction is in contrast to the bank’s investment focus on large-cap U.S. equities throughout 2023.
These forecasts coincide with recent analyses within the tech industry. For instance, analyst Mark Gurman highlighted the challenges facing Apple, as the company faces declining year-over-year sales.
Image via Shutterstock
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