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AS TARIFF UNCERTAINTIES WEIGH, BARCAP FAVORS VALUE AND YIELD STOCKS

Technology stocks have rebounded from a sharp selloff after President Donald Trump announced larger than expected trade tariffs in April and then paused them for 90 days, but uncertainties over trade levies and their impact on the economy remain.

For that reason value and yield stocks are likely better bets than growth, momentum and high volatility stocks for the near term, according to equity analysts at Barclays Capital.

“In a volatile, uncertain, and recession-prone environment, high Yield, low beta Value stocks offer relative safety. Macro and trade risks favor Value's domestic tilt, while Yield is attractive on valuations and tends to outperform in selloffs,” the analysts said.

Easing inflation could help growth stocks, but the impacts from tariffs remain a risk. Barclays is neutral on growth, citing its high beta and weak fiscal year earnings revisions relative to historical trends, outside of mega-cap tech companies.

The bank also maintains a negative outlook on momentum and high volatility stocks, “given their higher correlation in a volatile market; Low Volatility strategies consistently outperform other styles in distressed markets.”

Barclays also favors large caps over small caps, citing their better exposure to quality, better sales/EPS growth and much lower leverage and refinancing risk.

(Karen Brettell)

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