Where to direct investments in 2024? Analysts and experts have identified 4 trends to observe carefully to seek profits with a winning portfolio.
What is the winning strategy for investments in 2024? Between bullish and bearish stock forecasts, there are at least 4 trends to watch very carefully next year.
An analysis by Yahoo Finance turns the spotlight on investment themes considered crucial, from the attractiveness of the Magnificent 7 to the weight of emerging markets, up to the opportunities offered by small caps and stocks that concern consumer goods.
With an ever-vigilant eye on the Federal Reserve’s next moves, investors prepare for 2024 with 4 key themes to evaluate before investing.
1. What to do with the Magnificent 7?
Mega-cap stocks known as “The Magnificent 7” have played a key role in the rise of stocks this year. The group has a combined weight of 28% in the S&P 500, so their outperformance, largely driven by enthusiasm for artificial intelligence, has dominated the performance of the entire index.
However, the topic of technology and how much it can still shine as a sector is hotly debated on Wall Street.
DoubleLine CEO Jeffrey Gundlach is bearish and warned investors that the tech sector, and therefore the 7 giants related to it, will be among the worst hit by a recession.
Other strategists, including Goldman Sachs chief US equity strategist David Kostin, see the 7 megacap group outperforming once again.
“The 7 stocks have faster-expected sales growth, higher margins, a higher reinvestment ratio, and stronger balance sheets than the other 493 stocks and trade at a relative valuation in line with recent averages after having taken into account the expected growth”, wrote Kostin.
It should be highlighted that the stocks of the "Magnificent 7" - Apple, Alphabet, Microsoft, Amazon, Meta, Nvidia, and Tesla - have been the great drivers of market growth this year. With five weeks left in 2023, the S&P 500 is up 19%.
Throughout the year, investors have purchased shares of large-cap technology companies amid macroeconomic uncertainty, driven in part by the Fed’s aggressive interest rate hike campaign.
2. Focus on China?
The China stock market has struggled this year amid a lackluster economic recovery. The MSCI China index has fallen more than 9% since January 1. But that could all change in 2024, according to Charles Schwab strategist Jeffrey Kleintop.
Kleintop cited corporate investment in China, recent talks between President Biden and Chinese leader Xi Jinping, and economic stimulus as reasons to be more optimistic about the region. While the expert’s outlook for China is brighter, he warns investors to prepare for a “bumpy ride” given the dragon’s historical volatility and the wide-ranging challenges it faces.
As for specific stocks, UBS strategist Andrew Garthwaite sees ailing Chinese internet stocks set for a turnaround.
3. Small cap, an opportunity
According to eToro strategist Ben Laidler, the stock sectors most affected today represent a buying opportunity for investors and the reason is the Federal Reserve at the end of the rate hike policy.
“Moving forward into next year and we will get closer to the Fed cutting, that’s why we’re looking at those cheaper sectors that are sensitive to interest rates such as real estate, banks, and small caps ”, the expert suggested.
October inflation data prompted traders to shift higher expectations for Fed rate cuts in May, prompting a surge in small caps earlier this month. The Russell 2000 rose more than 5% last week.
4. Consumer goods momentum?
The S&P 500 is set to hit a new record by June next year and consumer discretionary is the best way to take advantage of the index’s gains, the equity strategist told Yahoo Finance Live American from JPMorgan Private Bank Abby Yoder.
“The bears argue that consumption is slowing, which we agree with, but the slowdown starts from very, very high levels”, according to the analyst. “The industry has already been through a period of earnings recession…We expect a reacceleration of profits along with margin support”.
In fact, this is a contrary view to that of many who are warning of weakening consumer spending this holiday season. Best Buy, Macy’s, Walmart, and Target issued the warning and signaled a shift in spending trends amid persistent inflation.
Original article published on Money.it Italy 2023-11-28 14:52:57. Original title: Investimenti, 4 trend da osservare nel 2024
