The S&P 500 (^GSPC) is expected to close at a record level of over 5000 points. While the move has investors excited, others are wary of continuing economic headwinds that could quickly dampen market sentiment.
Banrion Capital Management CEO Shana Sissel and Gradient Investments Senior Portfolio Manager Jeremy Bryan join Yahoo Finance to discuss the best ways for investors to manage their portfolios as the S&P 500 approaches its all-time high close. Masu.
Cissel commented on what could halt market momentum: “What's going on is I don't think there's a lot of headwinds. We have very strong economic growth, we have very strong employment. Well, that would be the Fed.” [Federal Reserve]. I think what's most likely to put the brakes on what we're seeing is the Fed not cutting rates as much as the market thinks. They've made it very clear that they're going to cut rates this year. I don't know exactly how many times, but the market expected it to be six times. The Fed questioned this. ”
For more expert insights and the latest market trends, click here to watch the full episode of Yahoo Finance Live.
Editor's note: This article was written by Nicholas Jacobino
video transcript
Josh Lipton: The S&P 500 index is on track to close above 5,000 for the first time in history, driven by gains in big tech companies. But the question here is: is it time to take a breather, or is there still room to run? In addition, Banrion Capital Management CEO Shana Sissel and Gradient Investments Senior Portfolio Manager Jeremy Bryan have created an investor handbook. Welcome to the show, both of you.
Jeremy, let's start with me. Listen, we might make history here. It looks like SPX, S&P 500 are about to close above 5,000. Jeremy, I was just curious, looking at this run, do you think the rally will continue or not? Do you think there are warning signs, at least in the short to medium term?
Jeremy Bryan: Yeah. You think 5,000 is just a milestone. It doesn't indicate any future direction.
So from our perspective, you can see that we're still at the stage where we're looking at the fundamentals of the business. And in most cases, there are still relatively strong signs that this can continue. First, generally speaking, when a market reaches an all-time high, it is more likely to rise than fall. So you have history on your side to some extent.
We have almost finished the earnings season, which had some uneven results, but overall I don't think the trajectory has changed to a negative one. Perhaps it was even slightly equal to a plus. And employment numbers continue to be very resilient.
The most important thing for us is to understand that consumers who have money and have a job, or can get a job if they want, will continue to spend money. It's what drives our economy. Therefore, we remain relatively positive about the overall market.
Julie Hyman: And Shana, how are you here? This momentum we've seen continues to set new records past her 5,000 level, but if this momentum ever stops, who is most likely to stop it? ?
Shana Cissell: Well, I don't see a lot of headwinds as far as what's going on. We have very strong economic growth and very strong employment. But if there's anything, it's the Fed.
I think what's most likely to put the brakes on what we're seeing is the Fed not cutting rates as much as the market thinks. They've made it very clear that they're going to cut rates this year. I'm not sure how many times. The market was expecting six, but the Fed gave it a scare. I think if anything is going to put a brake on what we're seeing, it's going to be the Fed's actions.
Josh Lipton: Jeremy, let's talk again, back to investment ideas for our audience. Jeremy, I think one of your favorite fields is healthcare. Why, Jeremy, where exactly do you think the opportunities are?
Jeremy Bryan: Yes, the valuation is relatively cheap, but it still has pretty good sales and earnings growth. So there are certain areas. Healthcare didn't work very well last year. In other words, overall performance was clearly poor. Most companies underperformed against technology.
But even then, there were some people who had outstanding results with GLP-1 drugs. However, everything else was half-baked. Once again, earnings estimates were not significantly missed, and the stock was cheap as a result.
That's why we believe there is an opportunity there. Whether it's insurance or devices, those are the areas we're most focused on. We think they are opportunistic and valuations are not aggressive for the opportunities they have.
Josh Lipton: Also, will Jeremy continue dating GLP-1 producer Novo, Lily?
Jeremy Bryan: No, that's their simple answer. So the short answer to that is we still think this is a phenomenal opportunity, right? Don't get me wrong. These will continue to be huge markets.
However, the resulting valuation is very different from NVIDIA's. That's also a big story. But if you look at the revenue growth there, the company's valuation is actually about the same or slightly cheaper. This is not the case for Novo and Lilly, which have seen dramatic changes in their valuation profiles.
If you have a three-year and a five-year horizon, it's going to be a little bit harder for them to continue to accelerate that pace, especially as competitors come in, unless we believe this opportunity is going to increase significantly. larger than the currently expected even number. And we're just not there. So we decided to eliminate it. We had such a position in the past, but not now.
