by Dan Weil
The “Magnificent Seven” stocks have led the market this year: Alphabet (GOOGL), Amazon, Apple, Meta, Microsoft, Nvidia and Tesla.
“I think they will remain leaders next year,” said David Kostin, chief U.S. equity strategist at Goldman Sachs.
“They have much faster revenue and earnings growth, stronger balance sheets, much greater cash reinvestment and higher margins than others.”
The central bank will shift to “gradual cuts in 2024, probably not until the second half of the year.” The Fed will begin the reductions in the fourth quarter.
The next most likely scenario is earlier rate cuts, which could happen if inflation falls faster to the Fed’s 2% target, or if the economy drops into recession.
The S&P 500 is now trading at 18 times earnings, but on an equal-weighted value it’s only 14 times.
“Quality will likely do well in this environment, where investors aren’t necessarily convinced that economic growth will continue,” he said. Quality stocks are those with strong fundamentals.
Growth stocks also are a possibility. “When earnings growth is modest, the market has rewarded companies growing at a faster pace.”
Source: The Street
https://www.thestreet.com/stocks/goldma ... Bin%2B2024
