The stock market turmoil of the past few days has left investors selling off in almost all sectors. As the dust settles, where are the opportunities?
At the end of newly-named Black Monday, nine out of the ten sectors in the S&P 500, the benchmark index for Wall Street, were negative for the year.
Healthcare was the only sector that is still positive for the year so far. The sector’s life raft has been kept inflated by both its perception as a classic “safe haven” in times of economic turmoil and an unprecedented wave of mergers and acquisitions.
Within the other sectors, opportunists are likely to start looking for stocks that were oversold in the rout—particularly those they favor for long-term performance.
“Looking short-term, equities are oversold from a technical perspective and are due a bounce,” Kevin Boscher, chief investment officer at Brooks Macdonald International, argued in a research note Tuesday.
“The current weakness presents us with some interesting opportunities to add to weightings in our preferred areas such as Japanese equities, domestically focused sectors in the U.K., U.S. and Europe and themes such as healthcare and technology.”
Goldman Sachs analysts argued that while many investors may go to perceived “safe havens” like consumer staples, these may not be the panacea they appear.
“It should be stressed that many of the companies in these sectors have high emerging markets exposure and are seeing a slowdown in earnings,” they wrote in a research note Monday.
European equities seem to be finding some favor, as investors take a bet that monetary policy will continue to be accommodative for longer.
“We like domestic Germany, the recovery in the periphery and domestic U.K. and Italian banks look good to us as a theme,” David Stubbs, global market strategist at J.P. Morgan Asset Management, told CNBC.
“The base of corporate profits is just as secure as it was a month ago… this is not the major downdraft in fundamentals that is the part of major bear markets.”