US stocks face market pullback – BlackRock

A recent downturn in US equities has impacted the country’s stock market performance relative to other economies, according to a report from BlackRock Inc.

While US markets ended a four-week decline with slight gains last Friday, the asset management firm noted that global markets are undergoing shifts driven by domestic economic policies and structural changes.

BNN Bloomberg reported that BlackRock sees these shifts creating new dynamics for investors.

Late last year, BlackRock described US stocks as standing apart from other markets, citing stronger growth prospects and the ability to capitalize on long-term economic drivers. However, the firm now points to policy uncertainty as a factor weighing on investor sentiment, contributing to a more than 3% decline in the S&P 500.

According to BNN Bloomberg report, the downturn has been exacerbated by investors moving away from certain trades. These include technology-heavy momentum stocks and cyclical investments that were previously positioned to benefit from expectations of US regulatory and tax policy changes.

At the same time, BlackRock identifies developments in other markets that could influence global investment trends.

The report cites Germany’s increased focus on defense and infrastructure spending, an improving outlook for Japan’s economy, and Mexico’s evolving role in global supply chains as factors shaping international equities.

Despite the recent market pullback, BlackRock maintains an overweight position on US stocks for the next six to 12 months, citing ongoing investment in artificial intelligence as a contributing factor. However, the firm warns that continued uncertainty presents risks to both US and global markets.

BlackRock acknowledges that economic conditions are shifting across different countries, leading to a more selective investment approach. While the firm continues to favor US equities in the near term, it also recognizes that prolonged uncertainty could weigh on risk assets worldwide.