DWS Group's David Bianco: Stay with tech, but pick the winners & look elsewhere

Market Overview - The market is experiencing a broad rally, although the NASDAQ is lagging behind [1] - There are concerns regarding the sustainability of the rally without big tech leading the way [1][2] Sector Performance - Technology sector continues to perform well, with a robust earnings outlook despite concerns over valuations and returns on capital [3] - Financials, utilities, and healthcare are preferred sectors, with expectations of increasing prices in healthcare due to inflation [3] - The Russell 2000 index has seen a decline of 1.4%, reflecting a rethink of expectations regarding Federal Reserve interest rate cuts [4] Economic Indicators - The core PCE inflation rate is at 2.9%, remaining above the Federal Reserve's target for over four years, indicating persistent inflationary pressures [5] - Recent economic data shows strong spending numbers, but there are concerns about whether Fed cuts will lead to lower mortgage rates [8] Interest Rates and Federal Reserve Actions - The expectation is for the 10-year yield to stabilize around 4.25% in the coming year, with potential for slight decreases [9] - There is a belief that the Federal Reserve will cut rates, but the yield curve may steepen, which is favorable for financials and banks [10] Tariff Impact on Companies - U.S. companies, particularly in the S&P 500, are well-managed and capable of navigating challenges posed by new tariffs [14] - The tech sector is expected to see winners emerge, but there is caution that enthusiasm for certain names may be overblown [15]