The Nasdaq 100 fell 10% from its high and entered a correction phase. Funds are expected to shift in November toward value stocks and companies outside the high-growth segment, while AI investment is expected to continue.
The Nasdaq 100 has recently fallen approximately 10% from its high and is reportedly in a correction phase. Meanwhile, all sectors other than technology and communications rose in October, and funds are expected to shift in November toward value stocks and companies with improving revenue and earnings growth. Although the growth rate of AI investment is expected to slow, spending is expected to continue, making individual stock selection important.
According to GDPNow, US GDP growth in the July-September quarter was 3.4%, with personal consumption contributing 2.5 percentage points. October retail sales rose 9.3% year on year, while real personal consumption maintained 2.5% growth even after adjusting for inflation. The market is said to be placing emphasis on the improvement in overall growth as a factor supporting its bullish stance.
Progress on earnings reports by S&P 500 constituents was strong, with 60% having reported and 82% beating expectations. Earnings growth rose to 30.2% and revenue growth to 13.4%, with all 11 sectors reporting year-on-year earnings growth. The forward P/E ratio for the next 12 months is expected to decline to 18.7 times, and the bullish view is being maintained.
As a reference case, the gap between the performance of the equal-weighted index and the Nasdaq 100 has widened since late September, suggesting that funds may be moving within the market. It has also been pointed out that individual stock selection will become even more important going forward.