Wolfe stays defensive but sees AI spending supporting growth stocks
Investing.com -- Wolfe Research maintained a defensive investment stance amid economic uncertainty, but continues to back growth stocks with exposure to artificial intelligence.
In a note, the firm said it expects interest rates to remain unchanged but warned markets may be too relaxed about inflation.
'Our sense is there could be a potential risk of the Fed cutting interest rates 0 times this year,' analysts at Wolfe wrote, citing lingering inflationary risks in the second half of 2025 despite recent soft readings.
Nevertheless, the firm does not anticipate a recession in 2025. 'We do not see a recession this year based on continued spending from the U.S. consumer,' the analysts said, pointing to the resilience of both high-income households, supported by the wealth effect, and lower-income households, which may benefit from the OBBB.
In this environment, Wolfe's U.S. Market Cycle Framework continues to signal a 'late cycle' backdrop.
The firm recommends investors maintain exposure to defensive sectors like consumer staples and utilities. However, it also sees promise in secular growth sectors—particularly technology and discretionary—due to their link to artificial intelligence.
'We'd remain defensively positioned (Staples, Utilities), while also favoring secular growth areas of the market (Tech, Discretionary) given their exposure to the AI Spending narrative,' the note said.
Related articles
Wolfe stays defensive but sees AI spending supporting growth stocks
Sina: JD.com's Liu vows innovation after 'five-year decline,' targets travel
Goldman upgrades Chinese EV makers XPeng and Nio on cost cuts, product improvement
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Insider
19 minutes ago
- Business Insider
A Fed governor just gave Trump fresh hope in his fight against the central bank
President Donald Trump has said repeatedly this year that rates should come down. On Friday, the president got a concurring opinion from a top official inside the central bank. Fed Gov. Christopher Waller told CNBC that he believes tariffs won't have a big impact on inflation and that Powell should consider cutting rates next month. "I think we've got room to bring it down, and then we can kind of see what happens with inflation," Waller said, adding that rate cuts could be paused again if geopolitical tensions rise and push up inflation. He also said that any concerns about the labor market should be addressed sooner rather than later, and the right call would be to "move now, don't wait." Arguments over whether to cut interest rates and by how much have swirled in markets all year. Fed fund futures still imply an 83% chance of no cut in July, with the September meeting being eyed as the earliest date for a 25 basis point reduction. Recently, Trump has been more vocal about his wish for the Fed to lower borrowing costs. Vice President JD Vance has also piled on, criticizing the central bank and describing its refusal to cut interest rates as "monetary malpractice." Waller's dovish comments initially sparked a positive reaction in markets, though stocks pared most gains by late morning. S&P 500: 5,985.71, up 0.08% Dow Jones Industrial Average: 42,318.84, up 0.35% (+147.19 points) Nasdaq Composite: 19,491.52, down 0.28% Despite the blowback, Powell has been insistent on remaining in a holding pattern until the data shifts. "We believe that the current stance of monetary policy leaves us well positioned to respond in a timely way to potential economic developments," he said at the recent meeting, adding that he would have more to say after reviewing economic developments. Trump has said he wished to fire Powell, though the market balked at the prospect of political meddling and forced him to temper his comments. As for who could be the next Fed boss, betting markets see former Fed Gov. Kevin Warsh, former Trump economic advisor Judy Shelton, and current Treasury Secretary Scott Bessent as the top three most likely picks, though the highest odds show no pick before December 2025.
Yahoo
22 minutes ago
- Yahoo
Stocks Erase Early Gains on Weakness in Chip Makers
The S&P 500 Index ($SPX) (SPY) today is down -0.26%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.09%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.59%. September E-mini S&P futures (ESU25) are down -0.16%, and September E-mini Nasdaq futures (NQU25) are down -0.48%. Stock indexes today gave up an early advance and turned lower on weakness in chip makers after a report from The Wall Street Journal stated that a top US official told top global semiconductor makers the US might revoke waivers for allies with semiconductor plants in China. Stocks today initially moved higher on signs of easing tensions in the Middle East. WTI crude prices erased gains and moved lower after Reuters reported that the Iranian government said it is ready to discuss limitations on its uranium enrichment. Stocks have support on speculation that the US will give negotiations a chance before deciding to enter the Israel-Iran war, following the White House's announcement on Thursday that President Trump would decide within two weeks on any US involvement in the conflict, and there is still a "substantial chance" of a negotiated settlement. Stocks also have support from dovish comments today from Fed Governor Waller, who said, "I think we have room to bring interest rates down as early as July, and then we can see kind of see what happens with inflation." Trading activity today may be more volatile than usual due to the expiration of approximately $6.5 trillion in June options, futures, and derivatives contracts, an event known as "triple witching." Today's US economic news was negative for stocks. The June Philadelphia Fed business outlook survey was unchanged at -4.0, weaker than expectations of an increase to -1.5. Also, May index of leading economic indicators fell -0.1% m/m, right on expectations, and the sixth consecutive month the LEI has declined. Stocks still have some negative carryover from Wednesday when Fed Chair Powell warned that tariff-driven economic uncertainty and inflation risk continue to complicate the Fed's chances to ease monetary policy. Also, the FOMC cut its US GDP forecast and raised its inflation forecast for this year. Hostilities between Israel and Iran entered an eighth day today with no signs of easing. Israel struck more of Iran's nuclear and missile production sites today and warned it could bring down Iran's leadership. Meanwhile, Iran said it won't negotiate with the US while Israel's assault continues. Iranian President Pezeshkian said the only way to end the imposed war is to "unconditionally stop" the enemy's aggression. Iran showed no signs of backing down and reiterated an intention to respond with force if the US were to get directly involved in Israeli attacks. So far, there's been no closure of the vital Strait of Hormuz that handles about 20% of the world's daily crude shipments, although a French naval liaison group said that navigational signals from about 1000 vessels a day moving through the strait are being disrupted due to "extreme jamming" of signals from the Iranian port of Bandar Abbas, which caused a collision of two tankers Tuesday near the Strait of Hormuz. Investors are bracing for negative tariff news within the next week or so following President Trump's announcement last Wednesday that he intends to send letters to dozens of US trading partners within one to two weeks, setting unilateral tariffs ahead of the July 9 deadline that came with his 90-day pause. The markets are discounting the chances at 15% for a -25 bp rate cut at the July 29-30 FOMC meeting. Overseas stock markets today are mixed. The Euro Stoxx 50 is up by +0.70%. China's Shanghai Composite closed down -0.07%. Japan's Nikkei Stock 225 closed down -0.22%. Interest Rates September 10-year T-notes (ZNU25) today are down -4 ticks. The 10-year T-note yield is up +2.8 bp to 4.419%. T-notes today are under pressure on negative carryover from weakness in European government bonds. Also, rising inflation expectations are bearish for T-notes after the US 10-year breakeven inflation rate today rose to a 2-week high at 2.337%. T-notes recovered from their worst levels on the weaker-than-expected Philadelphia Fed business outlook survey. Also, dovish comments from Fed Governor Waller were bullish for T-notes when he said, "I think we have room to bring interest rates down as early as July." T-notes are still supported by safe-haven demand on concern the US may be on the verge of joining the attack against Iran. European government bond yields today are higher. The 10-year German bund yield is up +0.9 bp to 2.530%. The 10-year UK gilt yield is up +1.8 bp to 4.548%. The Eurozone Jun consumer confidence index unexpectedly fell -0.1 to -15.3, weaker than expectations of an increase to -14.9. The German May PPI fell -1.2% y/y, right on expectations and the biggest decline in 8 months. UK May retail sales ex-auto fuel fell -2.8% m/m, weaker than expectations of -0.7% m/m and the biggest decline in nearly 1-1/2 years. Swaps are discounting the chances at 6% for a -25 bp rate cut by the ECB at the July 24 policy meeting. US Stock Movers Chip makers turned lower today and are weighing on the broader market. Lam Research (LRCX), KLA Corp (KLAC), and Applied Materials (AMAT) are down more than -3%. Also, Broadcom (AVGO), ASML Holding NV (ASML), Marvell Technology (MRVL), and Intel (INTC) are down more than -2%. In addition, Qualcomm (QCOM), GlobalFoundries (GFS), Analog Devices (ADI), and NXP Semiconductors NV (NXPI) are down more than -1%. Weakness in the Magnificent Seven stocks is a negative factor for the overall market. Alphabet (GOOGL) is down more than -2%. Also, Nvidia (NVDA), (AMZN), Meta Platforms (META), and Tesla (TSLA) are down more than -1%. Microsoft (MSFT) is down -0.10%, but Apple (AAPL) is buckling the trend and is up +0.34%. Accenture (ACN) is down more than -5% to lead losers in the S&P 500 after lowering its full-year operating margin forecast to 15.6% from a previous forecast of 15.6%-15.7%. Smith & Wesson Brands (SWBI) is down more than -15% after reporting Q4 adjusted EPS of 20 cents, weaker than the consensus of 23 cents. Jack in the Box (JACK) is down more than -1% after Stifel downgraded the stock to hold from buy. Kroger (KR) is up more than +7% to lead gainers in the S&P 500 after reporting Q1 adjusted EPS of $1.49, better than the consensus of $1.45. CarMax (KMX) is up more than +5% after reporting Q1 net sales of $7.55 billion, stronger than expectations of $7.52 billion. Fair Isaac Co (FICO) is up more than +2% after its Board of Directors approved a stock repurchase program to acquire up to $1 billion of the company's outstanding common stock. GMS Inc (GMS) is up more than +29% after the Wall Street Journal reported that Home Depot had made an offer for the company, potentially setting off a bidding war with QXO Inc, which made a $5 billion offer for the company earlier this week. Circle Internet Group (CRCL) is up more than +12%, adding to Wednesday's +34% surge after the US Senate passed stablecoin legislation setting up regulatory rules for cryptocurrencies pegged to the dollar. Mondelez International (MDLZ) is up more than +3% to lead gainers in the Nasdaq 100 after Wells Fargo Securities upgraded the stock to overweight from neutral with a price target of $78. Darden Restaurants (DRI) is up more than 1% after reporting that Q4 comparable same-store sales rose 4.60%, stronger than the consensus of 3.46%. Earnings Reports (6/20/2025) Accenture PLC (ACN), CarMax Inc (KMX), Darden Restaurants Inc (DRI), Kroger Co/The (KR). On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
23 minutes ago
- Yahoo
Stock Market Today: Techs sag on report U.S. will limit chip exports
Stock Market Today: Techs sag on report U.S. will limit chip exports originally appeared on TheStreet. Updated 11:45 a.m. EDT Stocks have lost their early gains on reports the Trump administration is planning to revoke waivers that allow chip companies to use American chipmaking technology in China. The Philadelphia Semiconductor Index and the VanEck Semiconductor ETF () were both off 1.3%. The catalyst was a Wall Street Journal report that a top Commerce Department official has told chip manufacturers like Taiwan Semiconductor () he wants to revoke waivers that gave them blanket permission to use American technology at their plants in China. Instead, the Commerce Department would require export licenses on each instance of using U.S. technology in China, The Journal reported. The idea, if enacted, would affect U.S. trade negotiations with China and could boost costs for the chipmakers. As a result, the Standard & Poor's 500 Index was flat at 5,980. It had been as high as 6,018 early in the day. The Nasdaq-100 Index, which includes key chipmakers, was down 43 points to 21,677. It had been as high as 21,902. Taiwan Semi was off 1.7% to $210. The Dow Jones Industrial Average was still up 159 points to 42,331. Updated 10:20 a.m. EDT Stocks jumped at the open, then faded slightly as investors seemed relieved that the U.S. was holding off on deciding whether to join Israel's war against Iran. At 10 a.m. EDT the Standard& Poor's 500 Index had climbed 16 points to 5,997. The Dow Jones Industrial Average had jumped 167 points to 42,339. 💸💰Don't miss the move: Subscribe to TheStreet's free daily newsletter 💰💸 The Nasdaq Composite Index had risen 32 points to 19578, and the Nasdaq-100 index was up 53 points to 21,772. President Trump said Thursday he expected to decide the question within two weeks. Trump frequently delays decisions like these. His Republican Party has split between isolationists, who form the core of the MAGA side, and hawks, who favor attacking Iran to disable the country's nuclear ambitions. Crude oil and gold prices were lower as war fever ebbed. Crude was off 52 cents to $74.60. Gold was down $28 to $3,380. Silver, which hit a 52-week high of $37.41 per ounce on Wednesday, had fallen 98 cents to $35.94 but was still up 22.2% for the year. It's not easy being Federal Reserve Chairman Jerome Powell. A day after the Fed held interest rates steady, President Trump was raging about the decision. Bill Pulte, chairman of the Federal Housing Finance Agency, was calling on the Fed chairman to cut rates or resign. Christopher Waller, a Fed governor (and believed to covet the chairman's job), told CNBC Friday he thinks a rate cut could come early as the Fed's July 29-30 meeting Powell's term as chairman doesn't end until May 2026, and Trump has basically guaranteed he won't be offered a third battle has to do with how the Fed is affecting mortgage rates. Currently, a 30-year mortgage will cost about 6.8% to 6.9%. Housing data are generally weak, and building optimism is seriously depressed. While Powell is the de facto leader of the Federal Open Market Committee, the Fed's rate-making body, he is only one of more than a dozen central bank officials who vote on the bank's interest rate moves. Even so, Trump has raged at Powell for more than seven years after the president elevated him to lead the Fed in 2017. Investors seemed relieved early Friday after President Donald Trump said he'd decide within two weeks whether to commit America to join Israel in its war against Iraq. Oil prices were falling with crude oil down 39 cents to $73.11. 💵💰💰💵 Trump's decision seemed to surprise many after he'd called for "unconditional surrender" from Iran over its nuclear aspirations. But Trump ally Steve Bannon, a vocal opponent of going to war, visited the White House on Thursday. Futures trading suggests the Standard& Poor's 500 Index will open 8 points higher. The Dow Jones Industrial Average was looking at an opening increase of about 67 points, and Nasdaq-100 futures were up about 50 points. U.S. markets had been closed Thursday for the Juneteenth holiday. Shares of Accenture () were off 2% preopen even as the consulting giant reported better-than-expected earnings and revenue. Barron's cited weak bookings and leadership changes for the decline. Shares of supermarket operator Kroger () were up 1% to $66.25. . Building-materials supplier GMS () shares were up 27% premarket to $101 as a bidding war for the company erupted between Home Depot () and Brad Jacobs' QXO. GMS has a market capitalization of about $3.1 billion. Wall Street believes the bidding is already at $5 billion. The 10-year note yield was up slightly at 4.436%.Stock Market Today: Techs sag on report U.S. will limit chip exports first appeared on TheStreet on Jun 20, 2025 This story was originally reported by TheStreet on Jun 20, 2025, where it first appeared.
