NEW YORK - As U.S. stocks lock in a solid first half, investors are speculating whether political uncertainty, potential Federal Reserve policy shifts and big tech's market dominance could make the rest of 2024 a tougher slog.
Investors have also become increasingly concerned about the narrowness of the market’s advance, which has been concentrated in a handful of tech powerhouses. Nvidia alone - whose shares are up 150% this year - has accounted for about a third of the S&P 500's total return, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.
The first live debate of the 2024 election race late Thursday spurred a rise in U.S. stocks futures and the dollar in a move some investors interpreted as a reaction to a strong showing by Trump. Some investors are looking to areas of the market that have underperformed in recent months, expecting the rally in tech to spread out into other sectors. Jack Ablin, chief investment officer at Cresset Capital, has been focused on "quality dividend companies" and small caps.
While the S&P 500 has risen by an average of 5.6% in the 12 months after a cycle has begun, cuts that came along with a challenging economic environment coincided with far worse returns, an Allianz study examining rate cuts since the 1980s showed. For example, a rate cutting cycle that kicked off around the collapse of the dotcom bubble in 2000 saw the index down 13.5% a year later.