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Truist co-chief investment officer and chief market strategist Keith Lerner believes tech stocks will run even higher in the fourth quarter, despite seasonal volatility (^VIX) that could persist.
Lerner joins Madison Mills and Brad Smith on Morning Brief to examine how the tech sector could see late 2024 gains driven by earnings.
"I think partly is that the earnings momentum is still with tech," he says, adding in his view tech stocks have "overextended positioning," so "what you've really been seeing in the last maybe month or two is really kind of getting some of that excess sentiment wrung out from the sector."
Tech stocks have "a bit further to go," and "as we get into the earnings season, in a cooling economy, tech on the earnings front still outperforms. He adds "That will drive investors back to tech" because "that's the part of this bull market."
For more expert insight and the latest market action, click here to watch this full episode of Morning Brief.
Keith, I know you see money going back into tech for the fourth quarter. What's going to be the catalyst for that? Is it Fed cuts or something else?
Yeah, I don't necessarily think it's Fed cuts. Um, I I think partly is that the earnings momentum is still with tech. And I think what's happened really in July, or heading into July, things just got overextended, positioning, overdone. So what you've really been seeing the last maybe month or two is really kind of getting some of that excess um, sentiment kind of wrung out from the sector. So I think that like that process likely has a bit further to go. So I think it's simply as we get into the earning season and you see in a cooling economy, tech, on the earnings front still outperforms, and I I think that will drive investors back to uh, to tech, because I still think it's the the part of this bull market, there's always a story. AI is still the story. If we think the bull market is intact, we think that's still likely intact as well.
Right. Keith, always great insights and perspective. We know you're going to be sitting on the edge of your ergonomic chair like we will be at 2:00 p.m. for the decision and 2:30 hinging on every word that Fed chair Powell has to say. Keith Lerner of Truist. Thanks so much.
Thank you.
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This post was written by Naomi Buchanan.