NEW YORK - A reassuring economic outlook and dovish signals from the Federal Reserve are encouraging investors to look beyond the massive growth and technology stocks that have fueled the U.S. stock market’s gains over the past year.
The broadening rally contrasts with last year, when uncertainty over the economic outlook prompted investors to seek shelter in the so-called Magnificent Seven group of megacap stocks, drawn by their dominant industry positions and strong balance sheets. Only the sectors that housed megacaps - tech, communication services and consumer discretionary - outperformed the S&P 500’s 24% gain last year.This year, the financial and industrial sectors are up 10.1% and 9.
Enthusiasm over artificial intelligence has helped fuel a 90% gain in shares of Nvidia so far this year, while Microsoft has gained 14.5%. On the other side of the ledger, Apple and Tesla are down about 11% and 32%, respectively, for the year. Some investors believe the group could get a boost from the Fed’s outlook, which kept in place a previous forecast of three 25 basis-point interest rate cuts, despite the central bank’s upgraded growth projections.