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The US major market averages closed on their worst trading day of 2024 on Wednesday. The Dow Jones Industrial Average (^DJI) closed 1.25% lower, while the S&P 500 (^GSPC) is down over 2.3%, and the Nasdaq Composite (^IXIC) tumbled over 3.6%.. T. Rowe Price global head of multi-asset and chief investment officer Sébastien Page joins Market Domination Overtime to discuss the action and why he remains neutral on the market. "We've never had this intensity of debates in our asset allocation committee between the bulls and the bears. And trying to boil it down into simple talking points, what are the bears talking about? A declining economy and high stock market valuations. That's pretty compelling," Page explains. "What are the bulls talking about? Hey, earnings are actually coming up overall and rates are coming down." He believes that both of these perspectives "make sense in this market environment," thus he encourages investors to "invest in line with your long-term risk tolerance." He also encourages investors to have diversified portfolios as both the bulls and bears have solid arguments on the overall state of the market. In addition, Page notes, "under the hood, we've been positioned for a rotation. So while we've equalized stocks versus bonds, we have been positioned long-value stocks." Page is neutral between small caps (^RUT, ^SP600) and large cap stocks. "The value versus growth rotation trade is more interesting because we look at the macro catalysts on the horizon. I think the election is one of them, is one of the catalysts that could continue this rotation." On the fixed income side, Page says, "We still have a small overweight cash. So we are somewhat short duration. I think we could see the yield curve steepen from here as the [Federal Reserve] starts cutting, most likely, and as the expectations for long-term inflation actually kind of maybe reset to a higher level." He believes that reshoring and inflationary policies could come out of the 2024 election, steepening the yield curve. For more expert insight and the latest market action, click here to watch this full episode of Market Domination Overtime. This post was written by Melanie Riehl
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