Morning Market Brief: Thursday, June 29, 2023

Potential opportunities in value stocks?

U.S. equities have had a solid start to 2023, with the S&P 500 Index posting a 14.0% return as of June 27. However, a look beneath the hood finds that most of the gains have been driven by only a few stocks, namely technology giants. Peter Hardy of American Century Investments argues that there may be some opportunities in value stocks (American Century Investments serves as a sub-advisor for several CIBC mutual funds). ?

• Hardy says returns this year have been fueled by developments in the artificial intelligence (AI) space, which has helped push up the performance of technology giants such as Microsoft, Apple and Amazon, among others. Otherwise, U.S. equities would essentially be flat this year.
• U.S. equities may pose a risk to investors in response to being highly concentrated. However, according to Hardy, the run-up in those stocks may have provided opportunities to invest in value stocks, which may excel based on lower expectations.
• Financial markets are still uncertain in response to inflation running at elevated levels, central bank actions and geopolitical tensions. As a result, there may be opportunities in quality companies with stable earnings and robust cash flow that can outperform in periods of uncertainty.
• Hardy believes some opportunities exist in the consumer staples and health care sectors. He believes there are strong companies that are attractively valued in these sectors, presenting opportunities for investors.

Economic uncertainty has historically provided opportunities in financial markets. Yet, there are many opinions on the best approach to stock selection during these times. One of the best approaches is to ensure your portfolio has exposure to quality companies poised for long-term growth yet can withstand potentially adverse short-term events. Please see the article and listen to the podcast: Narrow market highlights opportunities in value stocks

At?CIBC Private Wealth , we aim to take a comprehensive approach to managing, building and protecting your wealth. If you'd like to discuss this market and economic update in more detail, please get in touch with your advisor any time.