Emily Roland, Co-Chief Investment Strategist at Manulife John Hancock Investment Management, reframed this week’s selloff as an opportunity on Thursday, June 11, on CNBC’s Squawk Box. “We have been on a momentum freight train since the market lows back in late March. Certainly, seeing some overbought conditions, and we weren’t overly surprised here to see a little bit of a pullback. But of course, we wake up this morning, and this is a buyer’s dream market.”
The SPDR S&P 500 ETF Trust (NYSEARCA:SPY) is still up 14.4% from its March 27 low through June 10, even after a 3.82% weekly drop. The SPDR Dow Jones Industrial Average ETF (NYSEARCA:DIA) shed 3.18% between June 4 and June 10, capped by what Roland flagged as the Dow’s worst daily performance since October.
Earnings Are Doing the Heavy Lifting
Roland anchors the legitimacy of the 30% rally from the March lows as an improvement in fundamentals rather than just multiple expansion. “Analysts had penciled in 13% for this earnings season. That came in at 28%. We are firm believers at Manulife John Hancock that, over time, stock prices follow profits. And frankly, the earnings engine in the United States is on.”
Earnings across the market delivered more than double consensus estimates, which is helpful for investors to keep in mind. JPMorgan’s 2026 outlook echoes this point, noting that the tech sector’s free cash flow margin near 20% is more than double its late-1990s level, underscoring real profitability funding the AI buildout.
The Concentration Problem
The trickier question Roland raised was structural. “The entire global stock market has become a giant tech index. The S&P 500, 39% is in technology. You add the Mag-7. All of a sudden you’re at 52. Emerging markets, 42% of the index is in tech, 28% is just three stocks.”
Morningstar’s research backs the warning, noting the top 10 U.S. stocks now account for over one-third of the market, up from 18% a decade ago. Investors who think they own a diversified index fund increasingly own a concentrated AI bet.
The Plan B: Industrials, Defense, Onshoring
Roland’s solution is to keep existing equity exposure but redirect new dollars. “Plan B is about finding something else to add to portfolios. We’re looking at industrials. These are beneficiaries of defense spending. You’ve got onshoring activity that’s helping, the economy is holding in pretty well.”
That thesis aligns with Goldman Sachs’ 2026 outlook, which highlights $1.7 trillion in announced mega projects in North America associated with manufacturing since January 2021, and an €800 billion in EU defense spending in the ReArm Europe Plan 2030. Industrials capture both tailwinds without the mega-cap tech concentration.
Credit Markets Are a Sign of Confidence
The reason Roland treats this as a normal pullback rather than the start of something deeper comes down to credit. “High yield spreads are one we’re really watching. They’re contained right now. The credit markets are saying everything’s fine. No worries about defaults picking up, no concerns about a financial accident.” She put high-yield spreads at 2.73% today, with 3-4% as the initial concern level and above 4% indicating a potential liquidity event.
Other signals confirm the read. The 10-year minus 2-year Treasury spread sits at 0.42%, positive and well clear of inversion. Initial jobless claims at 229,000 remain inside the healthy 200K to 250K band. The VIX has popped to 22.22, elevated but a long way from the 31.05 peak on March 27, 2026, when fear peaked.
What Investors Should Watch
Roland’s bullish outlook depends on a very specific economic backdrop: consumers remain cautious enough to keep inflation under control, but the labor market stays strong enough to avoid a recession. Consumer sentiment remains weak, with the University of Michigan index at 49.8, while core PCE inflation remains elevated relative to recent history. Investors should watch high-yield credit spreads, weekly jobless claims, and whether earnings growth broadens beyond the Magnificent Seven into industrial and healthcare stocks.
