Stock markets (^DJI, ^IXIC, ^GSPC) are off to a bumpy start at the beginning of September trading, with Big Tech leading the downturn. Charles Schwab chief global investment strategist Jeffrey Kleintop joins Morning Brief to discuss more on the market dynamics he sees playing out.
Kleintop advises investors to “watch the [Japanese] yen for clues on the tech trade.” He notes that the trade dynamics of the yen and Big Tech are interconnected among investors, and this can be observed in the continued tech sell-off and the yen’s rise Wednesday morning. Kleintop also suggests that the unwinding of the yen carry trade may not be finished and could persist throughout the remainder of 2024.
However, Kleintop says the tech sector unwind “benefits sectors that are undervalued and under-owned,” recommending areas like financials (XLF), energy (XLE), and materials (XLB)
“What we’re seeing is the average stock in the S&P 500, look at the equal-weighted index (^SPXEW), is outperforming the capitalization-weighted index. So we’re seeing strength outside of tech, and that’s been our story about the second half of the year — a broadening of the market,” he tells Yahoo Finance.
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