Displaying items by tag: s&p

BlackRock is increasing its bets on U.S. equities and artificial intelligence across its $185 billion model-portfolio platform, according to a new investment outlook. The firm shifted allocations away from international developed markets, leaving its models 2% overweight equities and triggering billions of dollars in ETF flows. 

The move reflects confidence in a rally that has pushed the S&P 500 to record highs this year, fueled by strong earnings, enthusiasm for AI, and expectations of Federal Reserve rate cuts. BlackRock pointed to U.S. corporate earnings growth of 11% since late 2024, far outpacing developed peers at under 2%. 

The firm also reallocated tech exposure, moving from a broad tech ETF into an AI-focused fund, which attracted nearly $1.4 billion in a single day. 

Finsum: As BlackRock put it, AI is both a growth driver and a defensive tool for portfolios.

Jefferies analysts are bullish on specialty engineering and construction (E&C) firms, arguing they are uniquely positioned to benefit from the ongoing surge in infrastructure spending. Key long-term drivers such as electrification, grid modernization, and expansion of gas midstream networks are fueling demand across the sector. 

Despite outperforming broader benchmarks this year—up 12.1% year-to-date versus 2.6% for the S&P 500—Jefferies believes the sector still has room to run. They cite robust tailwinds like increasing project backlogs, margin expansion, strong renewables demand, and a tightening skilled labor market. 

With forecasted EBITDA and EPS growth far outpacing that of the S&P 500, analysts see current valuation premiums as justified, reflecting a re-rating of the sector. 

Finsum: While potential changes to the Inflation Reduction Act pose a risk, expect larger firms to consolidate market share and emerge stronger.

Once seen as a slow-moving defensive play, the utilities sector has surged in 2024, outperforming all other S&P 500 sectors thanks to its unexpected ties to artificial intelligence. With companies like Constellation Energy and Vistra powering AI data centers through nuclear energy, utilities are benefiting from tech-fueled demand growth typically reserved for Silicon Valley. 

This shift has pushed the sector up nearly 26% year-to-date and attracted strong inflows, even outperforming on both market-cap and equal-weighted bases. Traditionally valued for their consistent demand, pricing power, and dividends, utility stocks are now getting a second look from growth-focused investors. 

Actively managed funds like the Virtus Reaves Utilities ETF (UTES) have capitalized on this shift, delivering over 40% returns by overweighting AI-aligned holdings. Meanwhile, traditional utility ETFs such as XLU, VPU, and IDU remain popular options.

Finsum: AI could continue to reshape what investors expect from the utility sector.

Although it's common to think small-cap stocks suffer most during recessions, the data tells a more nuanced story. Analysis of developed markets shows that in 64% of years when GDP declined, small caps actually outperformed large caps—a rate even higher than their typical performance advantage. 

This finding challenges the belief that economic slowdowns always disadvantage smaller firms. One reason may be that financial markets are inherently forward-looking, often pricing in future recovery well before it's visible in economic data. 

As a result, the size premium—where small caps outperform—can still emerge during downturns. Ultimately, small-cap strength isn't strictly tied to GDP trends, underscoring the importance of long-term diversification over short-term predictions.

Finsum: This is much different than the interest rate driven volatility several years ago, this could be a great time to capitalize 

After leading the stock market in 2024, the communications sector is once again the top performer in 2025. Despite the dominance of tech giants like Nvidia and Palantir, communications continues to excel, largely driven by Meta Platforms and Alphabet, which make up nearly half of the sector. 

The Vanguard Communication Services ETF offers investors an affordable way to gain exposure to these companies, though its holdings are heavily concentrated. 

Alphabet and Meta thrive on high-margin advertising models, unlike media and telecom firms that require heavy capital investments. Both companies are aggressively investing in AI and cloud infrastructure, yet their valuations remain attractive compared to other mega-cap tech stocks. 

Finsum: As long as these two firms continue their strong performance, the communications sector—and funds tracking it—could potentially keep outpacing the broader market.