Market crash hides opportunities? HSBC: US stocks have priced in a recession, and these three types of stocks welcome a "golden pit"
HSBC Research believes that although U.S. stocks have pulled back due to recession concerns, the market has reflected the possibility of a mild recession, presenting investment opportunities in the technology, financial, and consumer discretionary sectors. The S&P 500 index has given back gains since the U.S. presidential election, and discussions about an economic recession are intensifying. HSBC is optimistic about technology and financial stocks, noting that technology stock price-to-earnings ratios have returned to historical averages, financial stocks are less affected by tariffs, and the consumer discretionary sector requires careful selection
According to the Zhitong Finance APP, HSBC Global Research stated that despite the significant pullback in U.S. stocks recently due to recession concerns, the bank believes that the market has fully reflected the possibility of a mild recession. Furthermore, amidst the current volatility, there may be opportunities in the technology, financial, and consumer discretionary sectors.
The bank pointed out in a report that the S&P 500 index has completely retraced all gains since the U.S. presidential election. Contributing factors include policy uncertainty driven by fluctuating tariff policies (which have reached historical highs), a sharp decline in consumer confidence, weakened optimism among small businesses, and a downward adjustment in market expectations for GDP growth in 2025.
This has led to an increasing discussion about economic recession in the market. However, HSBC still believes that the U.S. economy will remain resilient, even though growth may slow, and that current stock prices have reflected the possibility of a mild recession.
In the recent market adjustment, the financial, technology, and consumer discretionary sectors have been hit the hardest. Concerns about economic slowdown, declining interest rate expectations, and fading optimism about regulatory easing have put pressure on financial stocks; the technology sector has faced a double blow from DeepSeek and high valuations, especially in the hardware field. The consumer sector has been pressured by declining consumer confidence, unclear prospects for retailers, and potential price increases due to tariffs.
However, HSBC believes that opportunities are also hidden within the volatility. Historical data shows that the S&P 500 index typically declines by 7-8% during mild recessions and often begins to rebound before the recession ends. Currently, the S&P 500 index has fallen nearly 9% from its peak, and even considering all recession scenarios, the average market sell-off has only been 11-12%, indicating that the current market may be close to the bottom.
In this context, HSBC is optimistic about the technology and financial sectors and holds a selective attitude towards the consumer discretionary sector.
The bank noted that although technology stocks have significantly pulled back, the current expected price-to-earnings ratio has returned to historical average levels, with stable earnings expectations and high return on equity in the industry; the financial sector is less affected by tariffs and trade threats and is still expected to benefit from regulatory easing and economic resilience; within the consumer discretionary sector, low-income consumers are under pressure, but high-end consumers remain relatively resilient.
Specifically, HSBC listed stocks with a "buy" rating from its equity analysts, with a market capitalization exceeding $50 billion, including companies in the consumer sector such as Amazon (AMZN.US), Airbnb (ABNB.US), and McDonald's (MCD.US), as well as financial institutions like Bank of America (BAC.US) and Citigroup (C.US), and technology companies such as Microsoft (MSFT.US) and NVIDIA (NVDA.US)