Charles Schwab Senior Vice President & Chief Investment Strategist Liz Ann Sonders joins Yahoo Finance’s Akiko Fujita to break the latest market action as concerns over a second wave of coronavirus rise.

Video Transcript

AKIKO FUJITA: Let’s kick things off today with Liz Ann Sonders. She is a Senior Vice President and Chief Investment Strategist at Charles Schwab. And Liz, it’s great to have you on on a day like this to really make sense of all the moves here. We’re looking at four straight days of declines now. What do you make of the big pullback that we’re seeing today?

LIZ ANN SONDERS: So I think it’s a combination of factors. Clearly, what we began– what began as what was– many hoped would be a healthy rotation where you stimulated some profit taking in some of the prior high momentum areas of the market and a shift into more

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Illustration by Elias Stein

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Hedge funds shifted from market-leading technology and health-care investments in the second quarter, adding to bets on a cyclical recovery with larger positions in industrial and financial shares—and cheaper relative valuations in the market.

Goldman Sachs analysts recently compiled holdings of 815 hedge funds that managed about $2 trillion as the third quarter began. From the start of the year until Aug. 19, the

S&P 500

index rose 6% while the Nasdaq 100 added 30%. That’s much better than the average equity hedge fund in Goldman’s analysis, which returned 2% over the same period. But hedge funds’ best ideas did beat the S&P, with a basket of top-50 holdings returning 18%.

Health-care stocks remain the most concentrated hedge fund holdings, at about 21%, well above their 14% in the Russell 3000 index. But hedge funds cut their health-care position by three percentage points in

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Parts of the cyclical trade could be prime for a comeback, says Wilmington Trust’s Meghan Shue.

With stocks closing at all-time highs after a record-making week, the narrow leadership from growth stocks may be an indicator of what’s to come, the firm’s head of investment strategy told CNBC’s “Trading Nation” on Friday.

“A lot of commentators and strategists will point to this as a risk, and there are risks around that narrow leadership, but it also presents an opportunity,” the $114 billion money manager said.

With the economy slowly reopening and several possible coronavirus vaccines on the horizon, “we would expect to see some rotation into more cyclically oriented stocks,” Shue said.

But investors should be mindful of where they choose to put their money, she said.

“When it comes to growth versus value, … value has not really had the conditions in place to outperform,” the strategist said.

Industrial

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