Following July’s spectacular rally, U.S. stocks
have been caught in a tight trading range over the past two weeks as investors struggle to make sense of some of the most confounding economic data in recent years. But while the S&P 500 index has held above the key 4,000 level thanks largely to a rebound in badly-hit megacap tech stocks like Meta Platforms META and Amazon.com Inc. AMZN, a team of analysts at BlackRock, the world’s largest asset manager, believes investors would be better served by a less-exciting, defensively positioned portfolio of “low volatility” stocks and bonds.
This view is based on the notion that hopes for a “Fed pivot”, involving the Federal Reserve moving away from its plans to raise interest rates further, are badly misplaced, while signs of corporate performance are deteriorating, and inflation is the services sector is shaping up to be far stickier than investors presently expect. According to BlackRock’s Gargi Chaudhuri, head of iShares investment strategy for the Americas, the asset management giant’s in-house metrics are flashing contradictory signals about the state of the U.S. consumer and the corporate sector.
BlackRock’s in-house model of the U.S. economy is flashing warning signs for corporate performance while …