US stock futures rebound; institutions warn that sector rotation and high volatility may persist.

U.S. stock index futures rebounded after sharp volatility, following the Democrats’ victory in the midterm elections and full control of Congress, which triggered a sharp sell-off in the U.S. spot equity market the previous trading day. Daniel Murray, deputy chief investment officer at EFG Asset Management, said the prudent approach now is to prepare for continued sector rotation and sustained high market volatility. He advised investors to objectively review their portfolio allocations based on fundamentals, and avoid falling prey to market sentiment and panic. Stephan Kemper, chief investment officer at BNP Paribas Wealth Management Germany, said the core question the market needs to address now is whether tech stocks have become investable assets or a value trap. He noted that tech stock valuations are now far below their long-term averages, while earnings expectations have not seen significant downward revisions, which favors the former view. Greg Boland, market strategist at New Zealand-based Moomoo, said the current rebound appears more like buying the dip and short covering, rather than a fundamental shift in market sentiment. The more pressing question remains whether the massive investments in AI infrastructure will actually translate into the earnings and cash flows investors had anticipated.