LPL Financial has upgraded “technology” to neutral after growth dominated value in the first quarter of 2023.
Technicals suggest upside in tech stocks
Tech stocks are still trading at a significant premium versus the benchmark S&P 500 index.
On top of that, fundamentals, including earnings growth are not too convincing for the sector at large. Still, Jeffrey Buchbinder – the firm’s Chief Equity Strategist said in a note sent to Invezz:
The sector is clearly in favour right now. Our technical analysis work is pointing to further potential gains ahead, and macroeconomic conditions are becoming more favourable for growth stocks.
Earlier this week, jobs data suggested the labour market is finally starting to give in to the Fed’s policy as Invezz reported HERE.
Industrials remains the top sector pick
Nonetheless, Buchbinder cautions against diving head first into technology. His “neutral” rating on the sector recommends that investors split their portfolio evenly between growth and value.
The Chief Equity Strategist also sees a near 7.0% gain for S&P 500 in the first quarter as healthy. Explaining why, he wrote:
About 60% of S&P 500 stocks are trading above their 200-day moving averages, suggesting healthy breadth. Bottom line, breadth should not be a concern at this point.
Finally, what LPL Research is particularly bullish on is the industrials space that remains the top sector pick at the firm. “XLI” – the Industrial Select Sector SPDR Fund is roughly flat for the year at writing.
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