Despite the Nasdaq’s worst week since April, State Street reiterates its bullish stance on artificial intelligence trading.
Momentum stocks still have headroom, said Anna Paglia, the company’s chief business officer, as investors are reluctant to walk away from the growth story that has driven profits all year.
“Who wouldn’t want to be a part of the growth of AI technology? We’ve all been waiting for the growth-to-value cycle to turn, and I don’t see it happening yet because the momentum is there,” Paglia said on CNBC’s “ETF Edge” earlier this week. “I don’t think there will be a rebalancing trade until we see signals from the market that indicate a slowdown in these larger trends.”
Paglia, who has spent 25 years in the exchange-traded fund industry, thinks the sector will likely cool down early next year.
“There will be more focus on diversification,” he said.
Her firm manages several ETFs with exposure to the technology sector. SPDR NYSE Technology ETFup 38% year-to-date as of Friday’s close.
But the fund has lost more than 4% in the past week as investors took profits in AI stocks. As of Friday’s close, the fund’s second-largest holdings were: Palantir TechnologiesAccording to the State Street website. The company’s shares, which reported earnings on Monday, have fallen more than 11% this week.
However, Paglia reaffirmed his bullish view on the technology sector in a statement to CNBC later in the week.
Meanwhile, Todd Rosenbluth suggests that rotation is already starting to take control of the market. He noted that there is renewed appetite for health care stocks.
” Healthcare Select Sector SPDR Fund“It was unpopular for most of this year, but it started to come back in October,” the company’s head of research said in the same interview. “Healthcare tends to be a more defensive sector, so we’ll be watching to see if people continue to gravitate toward it as a way to diversify from some sectors, like technology.”
Healthcare Select Sector SPDR Fund Performance Is Underperforming technology The sector is up 5% this year since Oct. 1. It also had the second best performance. S&P500 This week’s group.
