Halfway Through: Will the Market Continue to Soar or Collapse?


The Midyear Market Mark: Stocks Soar, But for How Long?

As we approach the midyear mark, the stock market continues to soar, reaching new heights for the year. The S&P 500 and Nasdaq Composite celebrated fresh records, propelling the S&P 500 to a year-to-date gain of 12.93%.

This surge can largely be attributed to tech stocks and the persistent boom in artificial intelligence. However, experts ponder whether this upward trajectory can endure for the rest of the year, or if a potential decline looms.

Cautious Optimism: Can the Market Maintain its Momentum?

Some speculate that the U.S. Federal Reserve may be compelled to delay interest rate cuts due to persistent inflation. According to Scott Wren, senior global market strategist at Wells Fargo Investment Institute, “several potential issues could trigger financial-market volatility in the coming months.” He anticipates that the timing of potential Federal Reserve interest-rate cuts remains a primary catalyst for volatility. Wren also suggests that election surprises may further instigate a pullback in stocks.

Seeking Balance in the Midst of Uncertainty

Wells Fargo emphasizes the importance of rebalancing stock portfolios. Wren advises, “We anticipate vulnerabilities in tech-related equities amid uncertainties in long-term rates and volatile inflation. As such, we favor sectors with lower valuations compared to tech, but with strong long-term growth potential, such as industrials, energy, and healthcare.”

Beyond Tech: Emerging Stars

Investment manager Schroders predicts a potential surge in non-tech stocks. Jason Yu, head of multi-asset management (Asia) at Schroders, believes that “the gap between the so-called ‘Magnificent 7’ stocks and the broader market is expected to narrow throughout 2024.”

Potential Front-Runners for the Second Half

LA News Center collaborated with FactSet to identify under-the-radar stocks that have already outperformed the market this year and have the potential to excel even more in the second half of the year and beyond. These stocks meet the following criteria:

  • Gains of more than 13% year-to-date
  • Buy ratings from at least half of analysts
  • Consensus price targets offering at least 20% upside

These stocks represent a diverse range of industries, poised to drive the market in the latter half of the year.

As we navigate the uncertainties of the midyear mark, it’s crucial to maintain informed caution. The market’s trajectory remains uncertain, with the potential for both gains and setbacks. By prudently rebalancing portfolios and diversifying investments, investors can weather any potential storms and position themselves for continued success.