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INVESTORS SHOULD OVERWEIGHT LARGE TECH, SMALL-CAP STOCKS: NATIONWIDE'S HACKETT

Investors should continue to allocate their capital in large technology companies and small-cap stocks in the current environment, which is marked by the likelihood of a Federal Reserve interest rate cut, Nationwide Chief Market Strategist Mark Hackett told Reuters in an interview.

The U.S. economy is facing a "cascade of tailwinds" over the next six to 12 months, Hackett says. That includes from the massive package of tax and spending bill, which President Donald Trump signed into law in July, the multiple trade deals the White House has reached with major trading partners including Japan, the U.K. and the E.U., the weakening of the U.S. dollar against its peers, and an impending Fed rate cut in addition to the possibility of a more dovish new Fed chair.

This means that it is "a lot easier to make a bullish argument than a bearish one" when one adds in the fact that seasonality tends to get milder from September due to investing patterns of both retail and institutional investors, Hackett says.

As a result, the large technology stock space will continue to be favorable, notwithstanding their recent outperformance, as well as international stocks and small-cap equities, according to Hackett.

"Tech companies, including Microsoft MSFT.O, are moderating growth rates at the same time as the rest of the economy is accelerating growth rates," Hackett says. "There's that narrowing of the growth gap at the same time that the valuation gap is at the highest levels that we've seen since the tech bubble."

(Chibuike Oguh)

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