The bar keeps rising on this stock picker's market
SPY•Humilis Investment Strategies' Brian Belski says investors are becoming more selective, especially among large technology companies, and want evidence that elevated capital spending is generating returns. He expects this week's results from Alphabet, Microsoft and Amazon, along with the Federal Reserve's policy decision, to put company fundamentals in focus.
1. Selectivity in focus
Brian Belski, chief investment officer at Humilis Investment Strategies, said last week's trading showed that selectivity is becoming increasingly important, particularly among the largest technology companies. “The days when the Magnificent Seven moved in the same direction appear to be over,” he wrote Monday, adding that investors are demanding proof that elevated capital spending will generate meaningful returns.
2. Earnings offer a test
Belski said the market's reaction to Meta Platforms underscored scrutiny of the link between spending and results. While the long-term opportunity tied to artificial intelligence remains significant, he said investors increasingly want evidence that investments are producing tangible business benefits.
3. Leadership must be earned
Belski described the recent pullback from record highs as relatively mild but said market leadership can no longer be taken for granted. He expects earnings and guidance from Alphabet, Microsoft and Amazon this week, as well as the Federal Reserve's latest policy decision, to reinforce the importance of company-specific fundamentals. Humilis believes this earnings season could widen the gap between winners and losers.
