Wall Street Week Ahead: Last year's laggards lead U.S. stocks' 2023 rebound, for now
By Lewis Krauskopf – Feb 12, 2023
Excerpt follows...
NEW YORK, Feb 10 (Reuters) - U.S. stocks that took a beating last year are surging in the early weeks of 2023, leading markets higher. Some investors believe that trend is unlikely to last.
Stunning gains in shares of companies such as Nvidia (NVDA.O), Netflix (NFLX.O) and Meta Platforms (META.O) are lifting sectors that struggled in last year’s selloff, including technology (.SPLRCT), and communication services (.SPLRCL).
Smaller stocks that tumbled in 2022 have also burst out of the gate: a Goldman Sachs basket of unprofitable tech stocks that tumbled over 60% in 2022 has rebounded 21% in 2023, dwarfing the S&P 500’s 6.5% gain.
A range of factors are driving the moves, including the attractiveness of beaten-up shares, a tailwind from falling bond yields and market participants unwinding bearish bets against stocks.
Investors will be closely watching Tuesday's release of U.S. consumer price data for signs that inflation is continuing to moderate.
David Kotok, chief investment officer at Cumberland Advisors, is skeptical of the latest rally and some of the stocks leading the current run. His firm is underweight many of the big tech and growth stocks that have rebounded in 2023, preferring healthcare and defense shares and keeping a big allocation in cash.
“Either the deterioration last year from an overvalued space is over, or this is a dead cat bounce in a wounded large sector and the bear market of last year is not over," Kotok said. "I am in the latter camp.”
To be sure, there are some signs the leaders could continue to do well.
Read the full article at Reuters.com: https://www.reuters.com/markets/wall-st-week-ahead-last-years-laggards-lead-us-stocks-2023-rebound-now-2023-02-11/
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