Scott Glasser, chief investment officer at Clearbridge Investments, suggests that the US equity market is set for more diversified participation in the coming years. This follows several years of concentrated growth in mega-cap stocks. Clearbridge Investments is an equity and fixed income investment management firm. The company provides investment solutions through separate accounts and commingled funds.
Glasser highlighted the disparity between capitalisation-weighted and equal-weighted S&P 500 Index returns. He anticipates a rebound in relative earnings growth for the average stock. This shift, he believes, will broaden market participation, benefiting more diversified portfolios by 2026.
He also commented on the impact of recent fiscal stimulus, particularly measures from the One Big Beautiful Bill Act. These measures are expected to add between a quarter and a full percentage point to US GDP this year. Specifically, businesses can immediately deduct capital expenses related to equipment and R&D, which is projected to bolster overall capital spending. This spending is expected to remain strong, even if artificial intelligence capital expenditure moderates in the years beyond 2027.
Furthermore, Glasser noted that monetary policy will continue to support the economy, albeit to a lesser extent than some investors may expect. He pointed to long-dated yields as presenting some upside risk. Tariffs have also had a smaller inflationary impact than initially feared. The effective tariff rate is expected to settle around 6 to 8 per cent, which is less than half the level assumed six months prior, due to various carve-outs and exemptions.
