Wall Street reconfigures itself at the start of the year with Donald Trump as a backdrop

Wall Street reconfigures itself at the start of the year with Donald Trump as a backdrop

While mega-cap tech stocks, led by giants like Nvidia, presented a complicated start after dominating the market in 2023 and 2024, other sectors stragglers They recovered some lost ground after a portfolio rotation to more defensive sectors. For those doubts about the interest rate cuts and the reflationary policies of the new administration.

For example, the energy sector of the S&P 500 led this resurgence, driven by the rise in oil and natural gas prices. The background Energy Select Sector – SPDR Fund (XLE) is up a notable 8.5% so far in 2025 and stands out as the best performer so far, according to FactSet data.

In second place, The Health sector shows a solid recovery with an increase of 2.8%, followed by materials, which registered a gain of 1.5%. Both sectors, represented by the SPDR Select Sector ETFs health (XLV) and materials (XLB), were hit hard in 2024.

Wall Street: how the market analyzes the beginning of 2025

Gabriel ProrukTeam Leader of Equity Research in the Investing in the Stock Market Group (IEB)warns in statements to Scopeon the appreciation of Treasuries. “This phenomenon could lead to a correction in the equity market, given that if it continues, equity could lose its attractiveness and increase capital costs for companies, which would lead to a reduction in the growth of their profits.”

On the other hand, he highlights that in recent weeks the market became cautious and rotated its portfolios towards more defensive sectors such as energy, health and materials. However, the recovery of the energy sector, he analyzes, was favored by a strong recovery in international oil prices, after greater friction in the war conflict in the Middle East and the sanctions imposed by the US on exports of Russian crude oil to buyers. keys such as India and China.

For Proruk, this will lead to an improvement in the realized prices of companies in the sector. Oil & Gaswhich undoubtedly favors both its revenues and its margins. The strategist finds value, then, in the stock of YPF (YPFD) and/or Petrobras Cedear (PBR).

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For Pablo Waldman, of Balanz Capitalit is natural that after two extraordinary years for US stocks in general and, above all, for technology stocks, investors seek to at least partially rotate their portfolios towards more traditional sectors with more conservative valuation metrics.

Waldman also highlights industries, such as energy and basic materials, that could also benefit from the economic policies of the new Republican administration.

From GoodBit, They point out to this medium that companies such as ExxonMobil (XOM), YPF and Pampa Energía They stand out in this context for their ability to take advantage of the rebound in energy prices and their diversification into new projects. And they anticipate that “this change of focus towards sectors with long-term value could continue through 2025which presents great opportunities for investors to diversify their portfolios.”

Wall Street and artificial intelligence, is the market’s star going down?

The question that arises then is whether the locomotive of Wall Street, artificial intelligence, will continue as the spearhead of exorbitant profits. Flavio CastroAsset Management criteria, believes that while there are signs that the U.S. stock market may be overvalued — including an earnings multiple slightly above the historical average — At the moment it does not contemplate a bear market scenario on the horizon, the product of a favorable tax policy for the business sector in the face of the new Trump administration.

However, Castro remains grounded and asserts that from the firm he represents They are not as optimistic as the big investment banks. “Our medium-term vision is a US economy that will continue to lead economic growth, underpinned by the development of the technology sector and Artificial Intelligence (AI)”.

For this reason, Castro identifies value in technology companies within the growth sector and large caps such as Apple (AAPL), Nvidia (NVDA) and Microsoft (MSFT).

Wall Street Sectors.jpeg

Source: Financial Visualizations.

Source: Financial Visualizations.

And it exemplifies that a scheme similar to that experienced between 1994 and 2000 could be possible, which were marked by US leadership over the rest of the developed countries and a noticeable boost from growth companies large cap.

So, in the medium and long term, “The rise of artificial intelligence presents a favorable outlook for the rest of the decade,” the strategist slips. This despite higher rates, since the economy maintains its long-term growth level and if investment causes increases in productivity, inflation can be kept at bay, even with a higher target.

Waldman, for his part, qualifies with Castro and remembers that despite the restrictions on chips that hit Nvidia, the stagnation of sales of tesla or the antitrust lawsuit against Google “to cite some recent events that involve the big players in the sector”, lInvestors remain enthusiastic about the segment.

This is even despite the uncertainty generated by some announcements from Trump’s economic team and the increase in long rates on treasury bonds, he comments in line with what Proruk stated.

Cedears: which are the city’s favorites

Proruk comments that despite Trump’s threats of protectionism and the appreciation of the dollar globally, industrial metal prices have shown a recovery in the last week, and although the international steel market is in surplus of supply from China that puts pressure on prices, “It is an interesting strategy to position yourself in Ternium’s Cedear (TXR) which is located in an attractive price zone and with a Dividend Yield of 6.27% for 2025.”

It stands out that the health sector is considered one of the most defensive in the face of unfavorable contexts for international equities given that consumers in this industry will demand their products regardless of interest rates or the country’s commercial relations, which allows sustain income levels during these periods.

In that area, the selection of the strategist, the IEB Group is Eli Lilly & Co (LLY) company dedicated to the research, manufacturing and marketing of pharmaceutical products. Meanwhile, BuenBit considers JJohnson & Johnson (JNJ) and Intuitive Surgical (ISRG) Well, they are clear examples of how AI transforms everything from diagnosis to medical procedures.

Finally, Waldman offers some advice to investors. “I recommend, as the books unanimously say, diversify.” Concentrate the part of the portfolio assigned to variable income to broad indices such as the S&P 500 and limit discretionary bets to a maximum of 3% of the portfolio by position, he concludes.

Source: Ambito

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