Bank warns of impending market correction
Neuberger Berman senior research analyst Daniel Flax on the state of the tech sector and the overall markets.
Morgan Stanley analysts believe the stock market is showing signs of exhaustion, and in the absence of a major catalyst, a correction could be due.
The Dow Jones Industrial Average, the S&P 500 and the Nasdaq have all faced some downside pressure since Friday, and this comes despite a solid reading on fourth-quarter GDP and overall, positive earnings.
Commenting on the markets’ performance over the past few sessions, Morgan Stanley told investors in a note, “With Amazon’s strong quarter out of the way, and a very strong 2Q GDP number on the tape, investors were finally faced with the proverbial question of ‘what do I have to look forward to now?’”
The analysts believe that the stock selling has just begun, and that the markets are about to experience the biggest correction since February, according to research notes from the bank. They added that the negative effects could be worse on tech-centered portfolios, discretionary and small cap stocks.
What can investors do to find shelter from this slowdown? Utilities are the only pure defensive sector that analysts currently recommend as overweight, but energy, financials and industrials could provide investors some “value.”