4 Cyclical Funds To Benefit From A Stock Market Rebound

The volatility in the U.S. stock market might have been a result of misguided and negative investor sentiment, asset management firm Blackstone noted earlier this week, per a CNBC report.

U.S. equities gained on the Jan 7 trading session, keeping up with Friday’s surge, as the three major indexes fared well. Higher-than-expected December job additions induced positivity in equity markets. The optimistic investor sentiment was also a result of expectations of an affirmative U.S.-China trade deal this week and a possible oil price surge.

Given the optimism, it might be a good idea to invest in a few cyclical funds at present to benefit from a probable stock market rebound.

Blackstone Expects S&P 500 to Step Up in 2019

Blackstone’s investment strategist Joseph Zidle is hopeful of stocks rebounding in 2019, noting that it just isn’t a recessionary environment. Blackstone is anticipating a 15% rise in S&P 500 in 2019. The three major Wall Street indexes have gained since the beginning of this year.

Therefore, Zidle is advising investors to invest in cyclical sectors such as technology, materials, energy and industrials since a cyclical equity’s price performance is affected by the trends in financial markets. These stocks tend to do well during a booming economy and cut back during a downturn.

Favorable Trade Pact Could Ease Wall Street

The need for the United States and China to find middle-ground has intensified, given the distressing effect of the trade dispute on the Chinese economy and American companies alike. Apple’s price performance last week gives an insight into the operations of American giants being affected by China’s economic slowdown.

Washington-Beijing talks that began on Jan 7 have witnessed willingness on both sides for a resolution to the ongoing trade dispute. U.S. put about $250 billion worth of Chinese goods under the tariff umbrella as Beijing retaliated with its own.

"The trade war is going to get resolved. We think we see a deal in the first quarter… China and the U.S. have an incentive to get a deal done," Zidle said. An affirmative solution to the trade war could easily boost the equity market.

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