BlackRock stated Tuesday that it believes investors should continue to pursue a risk-on market position in the short term. In support of its call, the financial institution spotlighted falling inflation, nearing interest rate cuts and solid corporate earnings.
“As Q2 kicks off, we still see a more supportive near-term backdrop for risk-taking. U.S. inflation has eased from its pandemic highs and growth has held up. And expectations for S&P 500 earnings growth for 2024 have been revised up to about 11%,” BlackRock stated in a weekly market commentary report.
BlackRock added that organizations involved in the InfoTech space that appear to be leveraging the use of artificial intelligence have earning expectations that are higher than the general market. See the chart below that the world’s largest asset manager provided:
“We think upbeat risk appetite can broaden out beyond tech as more sectors adopt AI, and as market confidence is buoyed by recent Fed messaging and broadly falling inflation,” the firm stated.
While optimistic about the near-term market outlook, the asset manager did add that it also is prepared to pivot if inflation resurges and damages market sentiment.
Looking at Tuesday’s market action, the S&P 500 (SPY) (SP500), Dow (DJI) (DIA), and Nasdaq (COMP.IND) (QQQ) have all opened higher after Monday’s move lower.