As the first half of the trading year comes to a close this week, Russell Investments argued that the stock market has reached oversold conditions, a prediction that could bode well for beaten-down market-tracking exchange traded funds, like the SPDR S&P 500 ETF Trust (NYSEARCA:SPY), iShares Core S&P 500 ETF (IVV), Vanguard 500 Index Fund (NYSEARCA:VOO), Invesco QQQ Trust (NASDAQ:QQQ) and the SPDR Dow Jones Industrial Average ETF (NYSEARCA:DIA).
In a note put out Wednesday, Russell highlighted how recessionary fears and central-bank tightening are driving market volatility. However, the firm had a bullish take for the next six months.
“We think equity markets are oversold and believe U.S. core inflation has likely peaked. In our view, this should help markets stabilize and possibly recover over the second half of 2022,” the firm contended.
The note included a warning on inflation, however. The firm acknowledged that geopolitical forces could still pay a role.
“We think headline inflation may rise further if international sanctions on Russian oil exports cause an additional increase in energy prices,” Russell stated.
See complete report by Russell Investments here.
Year-to-date price action: SPY -20.1%, IVV -20%, VOO -20.3%, QQQ -29%, and DIA -14.8%.
In broader market news, major average indices look to find direction on Wednesday as they’ve bounced back and forth between positive and negative territory.