Since the beginning of this year, technology giants in the US stock market have seen strong gains and have become the main driving force behind the rise of US stocks this year.
Despite concerns about the sustainability of this rally, the strategy team of BlackRock, the world's largest asset management company, still favors US tech giants and is expected to continue betting on them.
Technology stocks continue to rise
Since the beginning of this year, driven by technology giants such as NVIDIA and Tesla, the Nasdaq 100 index has risen by about 40%. Meanwhile, these technology giants have also driven the S&P 500 index up by about 14% this year.
As of Tuesday Eastern Time, both the S&P 500 index and the Dow have risen for seven consecutive trading days, marking the longest consecutive gains since November 2021 and July this year, respectively. The Nasdaq is also in a "eight consecutive positive" period, setting its longest consecutive upward trend since the "eleven consecutive positive" period in November 2021.
Amidst such a strong uptrend, some market participants are concerned about the subsequent rise in technology stocks. But BlackRock's team responsible for building portfolio models still favors the largest companies in the US stock market - which means there may be a huge influx of funds into technology giants in the future.
BlackRock is one of the largest providers of ready-made strategies followed by global asset management companies and financial advisors. On Monday Eastern Time, Tushar Yadava, strategist at BlackRock's multi asset strategy and solutions, stated that the company has a "significant preference" for large technology stocks and growth stocks in its model investment portfolio.
Yadava believes that these technology giants often have the strongest fundamentals and can withstand the test of the Federal Reserve's tightening policies, so he remains optimistic about their subsequent gains.
He said, "As we enter the end of the year, we are more willing to hold the stocks with the largest market value... In terms of the industry, if you throw a dart, we would rather hold large cap stocks than small cap stocks because we see that the returns of large cap stocks are rebounding, which is the advantage of their balance sheets, which is the theme we want to hold now
Technology giants are better able to withstand interest rate hikes
BlackRock's model investment portfolio has approximately $100 billion in assets tracking US tech giants. Salim Ramji, global head of iShares and Index Investment at the company, predicted in July that the entire technology industry could grow from $4.2 trillion to $10 trillion over the next five years.
Yadava stated that although BlackRock's model briefly reduced its holdings in stocks after the March Silicon Valley bank thunderstorm and subsequent financial industry pressure, since the summer, BlackRock's funds have been; Quot; Slowly returning to the stock market& Quot;.
BlackRock's model portfolio team is not the only one inclined towards the largest company in the market. Alicia Levine, head of investment strategy at New York Mellon Bank Wealth Management, recently stated that large technology companies do not need to heavily utilize the bond market like their smaller peers, which frees them from some of the pressure brought about by the Fed's rate hike cycle.
I still believe you need to invest in large technology stocks. Large technology stocks in the United States grow without the need for borrowing, so this is a key point and part of the reason why the industry still achieved such a strong rebound when the Federal Reserve raised interest rates in the first half of this year