Best Investments for 2024
What lies ahead for the market in the second half of 2024? (Best Investment for 2024)
Technological and geopolitical trends continue to influence stock prices. Interestingly, the usually stable utilities sector has led S&P 500 performance over the past three months, driven by optimism about increasing revenue from AI data centers.
After experiencing a decline in March and April, U.S. large-cap stocks, as tracked by the S&P 500, have rebounded. The energy sector has also emerged as a leader, buoyed by rising oil prices. Factors such as geopolitical risk, increasing oil prices, and heightened demand have all contributed to the sector’s strong performance.
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The information technology sector has outperformed the broader S&P 500 so far this year.
Investors should keep in mind that some companies that are generally considered tech actually hail from other S&P sectors. For example, Meta Platforms Inc. (ticker: META) and Alphabet Inc. (GOOG, GOOGL) are leading stocks in the communications services sector, while Amazon.com Inc. (AMZN) is the most heavily weighted component in the consumer discretionary sector.
In the tech sector, key players in artificial intelligence and chipmaking, such as Nvidia Corp. (NVDA), Broadcom Inc. (AVGO), Micron Technology Inc. (MU), and Microsoft Corp. (MSFT), are driving performance. Chad Gammon, a financial planner at Arnold & Mote Wealth Management in Hiawatha, Iowa, noted in an email that while tech stocks can be volatile, they hold promise with the growth of AI and cybersecurity, emphasizing that technology remains a key driver of business.
Investors who use technical analysis may have noticed that the Energy Select Sector SPDR ETF (XLE) has been correcting in an orderly fashion since mid-April, which may signal that it’s setting up for new gains.
Several trends are poised to drive growth in the energy sector this year. Domestic shale-oil companies like Diamondback Energy Inc. (FANG) and EOG Resources Inc. (EOG) are increasingly gaining market share from overseas oil producers. Additionally, integrated energy giants such as Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX) are investing in U.S. shale properties, particularly in the Permian Basin in Texas and New Mexico. Furthermore, new technologies are enhancing efficiency for domestic oil producers, with companies like Exxon Mobil investing in technologies to boost oil extraction from their Permian operations.
Commodities such as agricultural futures, copper or crude oil can serve as hedges against equity market volatility and offer some protection against inflation.
According to a May 16 report from TD Bank, “The overall outlook for commodities has brightened since the start of the year supported by a global economy that has turned in a more resilient showing than anticipated.”
TD economist Marc Ercolao predicts that lower interest rates, robust demand, and ongoing supply constraints will boost commodity prices in the coming quarters. He noted that industrial metals prices remain high due to increasing demand and supply worries, while wheat prices are elevated because of concerns about supply shortages from weather events and geopolitical risks. Livestock prices are also rising due to supply shortages. Investors seeking exposure to commodities without trading futures can consider exchange-traded funds (ETFs) like the First Trust Global Tactical Commodity Strategy Fund (FTGC) or the Invesco DB Agriculture Fund (DBA), both of which have shown double-digit year-to-date gains.
We hope you enjoy the Best Investments for 2024!