Deep Dive: A paradigm shift for US equities

'Valuations matter'

clock • 5 min read
Sectors in the US stock market that have been leaders over the last decade have come to a sudden stop in terms of their outperformance of the broader market since the start of 2022.
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Sectors in the US stock market that have been leaders over the last decade have come to a sudden stop in terms of their outperformance of the broader market since the start of 2022.

With continued uncertainty around inflation, interest rates, economic growth and the war in Ukraine, US equities have had a weak first half of the year, which has many investors wondering whether they should be buying the dip.

Rising costs, prices and wages are weighing on business profitability. Higher interest rates and a more hawkish Federal Reserve means slower growth and a possible recession, making stocks even less attractive, said Fiona Cincotta, financial markets analyst at City Index. On 13 June, Wall Street's equities fell 3.9% to close at its lowest level since January 2021. The move left the index more than 20% below its January 2022 peak, a slide often identified as a bear market.  Despite several headwinds for the asset class and remaining concerns over unattractive valuations, experts that sp...

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