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US stocks extend years of streak

Investors are returning to US equities, betting that the domestic stock market can withstand new economic headwinds more than any other part of the world.

In contrast, the United States is less dependent on Russia’s oil, and the number of Covid-19 patients admitted to hospitals has dropped significantly. Many investors also believe that the US economy has plunged into geopolitical turmoil in recent weeks in a way that is sufficient to withstand the surge. Rising oil prices and anxiety caused by Russia’s invasion of Ukraine.

The S & P 500 rose 6.2% last week, the highest performance since November 2020, after the Federal Reserve raised interest rates for the first time since 2018. 6.4%.

Recent rallies extend US outperformance for years. Since its inception in 2010, the S & P 500 has quadrupled., Meanwhile, the MSCI Index, which tracks non-US equities, has risen about 30% in the meantime.

Recently, Germany’s DAX index has fallen by 1.5% since the invasion of Russia on February 24th. Over the same period, Shanghai Composite was down 6.8% and Hong Kong Hansen was down 9.5%.

“The United States is a safe haven in an increasingly dangerous world,” said Jim McDonald, chief investment strategist at Northern Trust, who managed $ 1.6 trillion at the end of 2021.

Investors this week will look to a speech by Federal Reserve Chairman Jerome Powell on Monday for further clues about the economic outlook. We also analyze revenue reports from Nike...

General Mills Inc..

And Darden Restaurants..

Measure the strength of US consumers.

“”“The United States is a safe haven in an increasingly dangerous world.”“”


— Jimmy MacDonald, Chief Investment Strategist at Northern Trust

According to McDonald, US energy and agricultural production will help protect the US from recent rises in commodity prices, while a strong US labor market should support the domestic economy, McDonald said. From other parts of the world, he said.

It’s not just Chicago-based companies. Over the last few weeks, money managers have changed their desire for regional stocks, accumulating US stocks and dropping stocks of European companies. US stocks, which they were overweight, surged 27 percentage points from February to March, and national stocks returned to a net overweight position in polls.

Olive Garden’s parent company, Darden Restaurants, will announce quarterly results this week.


Photo:

Chet Strange / Bloomberg News

Overseas, it was a different story. The percentage of survey respondents who overweighted Eurozone equities fell 48 percentage points to the region’s largest underweight value since July 2012. Preference for emerging markets, Japanese and UK equities has also declined.

The Ukrainian conflict is expected to put stress on the European economy as it puts a strain on the supply chain and raises the cost of energy and commodities for households and manufacturers. Europe’s economic recovery was less robust than the United States, even before Russia invaded Ukraine.

Atlanta-based wealth management company Homrich Berg said he is considering reducing allocations to international equities and moving to short-term bonds due to the risk of a slowdown outside the United States. Stephanie Lang said.

“There is no risk of recession in the United States. The risk of recession is increasing globally. There is a turning point,” he said.

Share your thoughts

What is the outlook for the S & P 500 in light of Russia’s invasion of Ukraine? Join the conversation below.

Indeed, some investors have stated that even with increased geopolitical instability, foreign equities are trading at significant discounts on US equities that are worth considering. According to FactSet, the S & P 500 traded at 19.2 times its expected earnings last week. .. Germany’s DAX had a forward multiple of 12.7, while Hang Seng was trading at 10.1 times the expected return.

Ben Kirby, Co-Head of Investment at Thornberg Investment Management, said:

Thornburg has been added to the position at Dutch insurance company NN Group NV in recent weeks...

And French oil and gas company Total Energies SE,

He said.

Equity funds in the U.S. recorded the largest inflows in the five weeks of the week ending Wednesday, while emerging market equities recorded the first outflow since December, according to an analysis by BofA Global Research of EPFR Global Data. Stocks recorded an outflow for the fifth straight week.

The United States accounts for approximately 60% of the MSCI ACWI All Cap Index, one indicator of the global stock market.

Transactions were volatile not only in the United States but also abroad. Both the S & P 500 and the Dow Jones Industrial Average have suffered the first revision in recent weeks (down at least 10% from recent highs). The Nasdaq Composite Index has fallen by more than 20% in the bear market.

However, many investors seem to use these withdrawals as a buying opportunity. Merrill Lynch reported that customers are buying dips and have recently endorsed shares in the consumer discretion and consumer staple segment.

The sectors that have shown the best performance of the S & P 500 in the past month are energy stocks that benefit from rising oil prices and utilities and healthcare stocks that investors often rely on when they are cautious about their economic outlook.

Chevron Co., Ltd...

Shares rose 21% last month, but the shares of pharmaceutical company Eli Lilly & Co..

20% increase, utility share NextEra Energy Inc..

Another powerful performer is the supermarket company Kroger Co...

22% ahead, JB Hunt Transport Services Inc..

Increased by 14%.

Write to Karen Langley at karen.langley@wsj.com

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