A top investment strategist at Citi Wealth says US large-cap stocks are positioned to outperform as markets navigate rising geopolitical and economic uncertainty.
In a new Bloomberg interview, Citi Wealth chief investment officer Kate Moore says positioning and sentiment in equity markets help explain why large-cap US stocks are holding up better than other parts of the market.
“What we’re seeing is the resilience in the US large-cap space… the S&P 500, which has been treading water for six months, is holding up relatively well because people had already taken down a little bit of their exposure there.”
Moore adds that US large-cap stocks remain one of the highest-quality segments of the equity market.
“And it’s frankly a higher quality part of the market. So there were a lot of things in terms of positioning and sentiment in play at this moment that I think are leading the US large caps to outperform in the equity market. And frankly, our view is that it is likely to continue, that US large caps are the safest place in that risk asset.”
Looking at certain sectors within US large caps, Moore says secular stocks are at the top of her list, especially now that investors have reduced positions in mega-cap tech following concerns about AI CapEx.
“Huge concentrated positions, we’ve talked about it so many times, questions around the sustainability of AI, CapEx, hopefully people took some of that fear off as we went through the first quarter earnings season. But the whole point is that people were taking down some of the risk in some of the secular growers. I think those still offer better quality and frankly better likelihood of being able to sustain their earnings momentum even in a more kind of a geopolitical and economic shock environment.”
Moore also pointed to opportunities in industrial metals tied to the AI infrastructure buildout.
“But I do want to mention something on the cyclical side because we know there is consistent demand for industrial metals. We’ve talked about copper and other things going into the AI build-out and CapEx story. I think we’ll see, even if there’s a significant amount of price volatility across the resources complex, that the opportunities there remain quite strong in the material side.”
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