Progress shares led the market sell-off in 2022, however it’s too quickly to purchase in, in response to UBS strategists.
“Going ahead, we expect it’s nonetheless too early to get again into tech shares. Whereas valuations for progress shares are actually much less demanding, they’re nonetheless excessive relative to worth shares,” David Lefkowitz, head of Equities Americas at UBS International Wealth Administration stated in a observe to shoppers.
The S&P 500 (^GSPC) simply had its worst 12 months since 2008. The underside 5 shares for 2022, had been Apple (AAPL), Amazon (AMZN), Tesla (TSLA), Microsoft (MSFT), and Meta (META).
“As a gaggle, these shares accounted 19% of the S&P 500 market cap in 2022 and -8.7 share factors of the S&P 500 return. On common, these shares fell -47% in 2022,” famous Lefkowitz and his workforce of strategists.
“Most of the costliest shares suffered from the surge in rates of interest (which weighed on valuations) in addition to a slowdown in segments of tech reminiscent of e-commerce, digital promoting, and cloud computing,” wrote Lefkowitz.
“And we expect some tech firms should still be susceptible to earnings downgrades within the months forward as prospects proceed to digest the surge in purchases made in 2020 and 2021,” he added.
Minutes from the Federal Reserve’s December coverage assembly launched Wednesday point out officers do not suppose it is acceptable to chop charges this 12 months.
A better rate of interest surroundings impacts the current worth of an organization’s future money flows. Progress inventory valuations had been hit significantly laborious in 2022, because the central financial institution raised charges right into a weakening economic system and earnings expectations slowed.
Ines is a senior enterprise reporter for Yahoo Finance. Observe her on Twitter at @ines_ferre
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