The US Federal Reserve’s rate cut and a bounce in employment have left us all scratching our heads about the direction of the economy. The rise in consumer inflation isn’t helping either. (A perfect storm?)
Uncertainty can be more damaging than actual bad news for stock markets, so that leaves us probably staring at another sell-off. There’s money to be made in all those ups and downs though. But don’t take our word for it; that’s what Swiss banking giant UBS is saying.
And Goldman Sachs agrees: “We would want to buy the dips as they occur.”
That approach can even help you play the AI story long term. UBS recommends buying those dips to build long-term exposure, especially with earnings season potentially acting as a catalyst for the market.
SOXX looking good 😎
- Semiconductor stocks and megacaps still shine when it comes to building an AI portfolio, says Mark Haefele, chief investment officer at UBS Global Wealth Management.
- The iShares Semiconductor ETF (SOXX) has bounced back after every dip over the past month and is up 13%. That easily outpaces the S&P 500’s 5% gain over the same period.
For the bears
Even if stock declines seem more likely, they’re expected to be short-lived and not lead to a longer term downturn. Goldman says the risk of an imminent bear market (a 20% drop from a peak over 12 months) is still low.
It does seem like ChatGPT hasn’t exactly been seeing eye to eye with Wall Street lately, though.
