Hello! For this week’s ETF Wrap, I spoke to Michael Arone, chief investment strategist for the U.S. SPDR business at State Street Global Advisors, for his view of markets and where ETF investors may look for opportunities at this stage of the Federal Reserve’s interest rate-hiking cycle. Please send feedback and tips to [email protected] or [email protected]. You can also follow me on X at @cidzelis and find me on LinkedIn. Isabel Wang is at @Isabelxwang.
Sign up here for our weekly ETF Wrap. Bond-market volatility spilling into stocks in 2023 may also be creating investment opportunities that could pay off in the next year, according to Michael Arone, chief investment strategist for the U.S. SPDR business at State Street Global Advisors. “When interest rates have this great of impact on the stock market, historically, going forward it’s been a positive sign for stocks,” he said in a phone interview. Investors may see over the next 12 months a broadening in the participation of in any stock market rally, with a potential recession in that period likely to be short and shallow, according to Arone. He said “the stock market may not be impacted for very long” by such a downturn. Small-cap and value stocks stand to see some of the biggest gains, said Arone. That’s based on past periods when interest rate volatility rocked markets and similarly led to high dispersion in equities, he said. The U.S. stock market is being driven by a small group of Big Tech stocks this year, while small-cap companies have lagged and large-cap growth equities have broadly crushed value.
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