Financiers talk about the beginning of a big rotation in the U.S. stock market

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The Fed’s policy change could change trends on the stock market and lead to a decline in the influence of technology companies

The drop in tech stocks and the sharp decline in cryptocurrency rates late last year could continue this year amid the U.S. Federal Reserve’s (Fed) decision to raise the discount rate. Financiers surveyed by The Wall Street Journal believe this will lead to a major rotation in the stock market.

According to the forecast of analysts of some largest banks, at the beginning of the year the S&P 500 will test last year’s minimum, but by the end it will show growth above 4%. According to Ben Inker, co-director of asset allocation at GMO, a Boston-based investment firm, the interest in tech stocks that fueled market growth in the previous decade will diminish in a world of renewed interest rates. On the contrary, there may be renewed interest in value stocks, which have posted poor returns in recent years.

Portfolio manager T. Rowe Price portfolio manager John Linehan thinks that we should also expect interest in shares of financial companies amid high interest rates.

Janney Montgomery Scott chief investment strategist Mark Luschini thinks the current trend will no longer change and tech stocks won’t play a central role in the next decade. “The universal notion that investing in the NASDAQ is enough is changing,” he says.

Tiffany Wade of Columbia Threadneedle Investments disagrees with him, though. In her opinion, growth stocks can still regain their positions if the Fed stops raising the interest rate.

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