The BlackRock Investment Institute has shifted its stance on US equities back to overweight.
In its latest weekly commentary, the BlackRock cites resilient corporate earnings and contained economic fallout from geopolitical tensions in the Middle East.
“We go overweight. Contained damage to global growth from the Mideast conflict and strong earnings expectations – particularly in tech – keep us risk-on.”
The analysts also point to economic incentives for de-escalation in the U.S.-Iran conflict, suggesting that U.S. equities are likely to outperform even if broader market returns prove modest.
The institute believes emerging market (EM) stocks and defense-related themes remain attractive opportunities.
“We see evidence of economic incentives to end the U.S.-Iran conflict. We turn moderately positive risk and like U.S. stocks as a relative preference, seeing them holding up better even if absolute performance disappoints. We also turn overweight EM stocks and still favor thematic opportunities like defense.”
The shift reverses a March move from overweight to neutral on U.S. equities, which was driven by market volatility and concerns that higher interest rates could weigh on stocks, particularly small caps.
Over a six to twelve-month horizon, the institute continues to favor AI infrastructure and equipment providers, noting that “electro tech” components such as batteries, power electronics, and electric motors are poised to benefit from rising electricity demand and supply constraints.
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