It is reported by the Wise Finance APP that, as the market expects the Fed to cut interest rates, investors are turning to undervalued stocks in the hope that they will recover. According to Bloomberg's industry research data, from September to date, value stock exchange-traded funds (ETFs) have attracted an inflow of $6.9 billion, making it the best-performing month this year. At the same time, growth stock ETFs, which usually invest in large companies in the technology industry, have experienced a decrease of about $13 million in funds.

Figure 1

In September, more than half of the funds inflowing into value ETFs went to the iShares MSCI EAFE Value ETF (EFV.US), which benefited from BlackRock's adjusted model investment portfolio strategy. BlackRock has reduced its investments in US stocks and growth stocks, favoring value stocks and fixed-income products instead.

Tushar Yadava, a strategist at BlackRock, commented on EFV, saying, "We believe this ETF has the best profit potential." Despite their continued bullishness on growth stocks, they are balancing their investments by increasing the proportion of value stocks in the portfolio.

In September, other outstanding value funds included the SPDR Portfolio S&P 500 Value ETF (SPYV.US), with a size of $25 billion, which saw a historical high in fund inflows last week. In addition, the iShares Russell Top 200 Value ETF (IWX.US), with a size of $3.2 billion, also attracted inflows of more than $0.8 billion this month.

It is understood that traders on Wall Street are selling technology stocks, which were the main driving force behind this year's bull market. As market expectations of the Federal Reserve lowering borrowing costs to stimulate economic growth increase, investors are turning to traditional industries such as utilities and real estate in search of new growth opportunities.

In the past two years, technology giants such as Nvidia and Microsoft led the stock market and attracted a large number of investors. However, now, due to concerns about economic growth slowdown and the possibility of the Federal Reserve starting to cut interest rates as early as this Wednesday, traders are shifting their focus to industries such as real estate, utilities, and consumer staples.

Since the S&P 500 index reached its peak on July 16, most of the so-called seven tech giants, including Nvidia, Microsoft, Apple, Alphabet Inc., Amazon, Meta Platforms, and Tesla, have experienced a decline, with the Bloomberg seven tech giants index falling by 5.3%. In contrast, the broader stock benchmark index has fallen by less than 1% during this period, mainly because the S&P index has an overweight position in these fast-growing tech giants. However, industries such as real estate and utilities have significantly outperformed the index, rising by 11% respectively.

These data also include the rise of the S&P 500 index last week, with technology stocks leading the way.

Figure 2

Matt Maley, Chief Market Strategist at Miller Tabak + Co., said: "This positive market performance seems to indicate that investors now have more confidence that the rate cuts to be taken will help economic growth next year and contribute to more balanced profit growth."

It is widely expected that the Federal Reserve will begin an interest rate cut cycle on Wednesday, with a possible cut of 50 basis points. On Tuesday morning, despite the latest economic data showing resilience in US consumers, the market still estimates a 55% chance of policymakers announcing a 50 basis points rate cut.