Hawkish Fed boosts value stocks’ appeal

Changing tactic: Traders on the floor of the New York Stock Exchange. Some investors are focusing on high-quality, cyclical US large-cap companies that do not trade at high valuations. — AFP

NEW YORK: Some investors are preparing for a hawkish turn from the Federal Reserve (Fed) by buying the cyclical, economically-sensitive names they gravitated to earlier this year, as expectations grow that the central bank is zeroing in on fighting inflation.

The gap between growth stocks and their value-focused counterparts, which include companies like banks, financials and energy firms, has fluctuated throughout the year, driven in part by bets on how quickly the Fed will normalise monetary policy.