2023 – reign of Magnificent Seven
2024-01-01
Summary:
The "Magnificent 7" ruled investments last year, with a combined market value almost matching Canada, China, Japan, the UK, and France combined.
The “Magnificent 7” has dominated the investment landscape in the past year
They have grown so big that their combined market value nearly equals that of
Canada, China, Japan, UK and France in total.
Market participants are mostly planning to put their money in the S&P 500, the latest CNBC survey showed. 16% said they are particularly interested in Nasdaq 100 stocks.
77% said the “Magnificent 7” would do better cumulatively than the rest of the S&P 500. When it comes to the biggest risks for stocks in 2024, stubborn inflation and problems with commercial real estate ranked highest followed closely by slow growth.
History suggests the current rally will continue. Going back as far as 1972, in every year after a market recovery, the Nasdaq has risen 19%, on average, illustrating the potential for additional upside.
Traders in recent weeks doubled down on bets for steep rate cuts this year, encouraged by slowing inflation around the world and a dovish shift from the Fed.
That being said, stock investors looking for relief from higher interest rates in 2024 may be set for disappointment with financial markets indicating rates will stay elevated for years to come.
The central bank is expected to cut its key rate to around 3.75% by the end of 2024, and to around 3% by the end of 2026, money market pricing suggests. That would be underpinned by a soft landing scenario that materialises.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
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