Defensive sectors conquer the markets – tech giants under pressure

In the past three months, stock market dynamics have noticeably shifted. While technology and AI stocks are losing traction, defensive sectors such as utilities, healthcare, real estate, and bonds are gaining significance. A look at the performance reveals that ETFs like Real Estate (XLRE), Treasury (TLT), Utilities (XLU), and Healthcare (XLV) have significantly outperformed SPY and QQQ since June. This investor trend aligns with current signals from the Federal Reserve indicating an interest rate adjustment, and macroeconomic indicators (employment, growth, inflation) pointing to an economic slowdown – but not a recession. Even within these reciprocal market conditions, opportunities arise. The technology stocks that have been out of favor for about three months, including the "Magnificent Seven" stocks, are now at attractive levels. Notably, Apple, Meta Platforms, and Nvidia stand out. On Monday, Apple introduced a new product lineup: the iPhone 16 and 16 Pro, the Apple Watch Series 10, and the AirPods 4. These products bring significant improvements such as enhanced camera features, longer battery life, and the new AI system Apple Intelligence. The Apple Watch Series 10 and AirPods 4 also offer advanced health monitoring features, including sleep apnea diagnosis. While critics often dismiss the innovations as incremental, it is precisely the advanced health and AI features that currently make Apple's stock so attractive. In an otherwise volatile market, Apple has managed to perform above average since May. If the stock breaks the $220 mark, a new high could be imminent. Meta Platforms has weathered past controversies and shines with impressive growth and profitability. Revenue forecasts for Meta are up 19.8% this year and 13.9% next year, while earnings are expected to increase by 43.6% and 12.7%, respectively. Currently, Meta is trading at a more favorable forward-earnings multiple compared to the market average, making the stock appear attractive—especially if it breaks the $515 mark. Meanwhile, Nvidia is dealing with corrections but offers significant long-term growth potential. Despite recent setbacks, which have made the stock more attractively priced, analysts project Nvidia's annual earnings increases at 41.7% over the next few years. At a forward-earnings multiple of 38x, Nvidia appears attractive compared to its historical valuation. For long-term oriented investors, these three tech giants offer a mix of stability, innovation, and growth. Given their recent setbacks and the general market uncertainties, Apple, Meta Platforms, and Nvidia could prove to be lucrative entry opportunities.