Markets Elevate a Half-Full Glass to 2024

On the identical time, the economic system is nowhere close to recessionary ranges. On Dec. 21, weekly jobless claims rose by lower than forecast, remaining close to historic lows and indicating a robust employment atmosphere. As well as, retail gross sales information for November beat forecasts, displaying that U.S. customers had been spending through the vacation season. Add to that an ongoing revival on the housing entrance, as single-family homebuilding surged to greater than a 1-1/2-year excessive in November and stands poised to realize additional momentum within the yr forward.

In the meantime, there’s nonetheless a long-term catalyst brewing across the want for brand new housing for people. Decrease mortgage charges in 2024 might solely push this ahead. These arrows all level to an uptick in housing exercise in 2024.

Housing, after all, is an enormous multiplier for the remainder of the economic system. If you happen to purchase a brand new home, you’re additionally going to want new furnishings, new home equipment, perhaps even a brand new automotive … you see the place that is going. 

How I’m Investing Proper Now

Wanting on the information, now is an efficient time to optimize a portfolio to be able to revenue off a housing resurgence. Going into 2024, I stay bullish on corporations with earnings momentum — benefiting from decrease inflation prices, pricing energy, restored inventories and secular demand. This contains expertise, industrials and discretionary names.

I additionally assume the approaching election yr could have a big effect on shopper sentiment, in the end giving it one other enhance. As I’ve been saying: Don’t guess towards the U.S. shopper. So long as the roles market stays wholesome, I see shopper sentiment remaining sturdy. That is solely win-win for general company earnings and the economic system.

However, heading into 2024 I’m not as bullish on the mega-cap tech corporations that had been an enormous driver of the S&P 500’s main rally in 2023. Expectations for a lot of of those corporations are at exceedingly excessive ranges. Whereas I nonetheless count on them to carry out in 2024, I don’t count on to see a repeat of the outperformance that we noticed in 2023.

There additionally continues to be a disconnect within the capital elevating for the vitality house, as a number of vitality corporations are persevering with to push share buybacks and dividend applications. It continues to be a superb place to be, as I don’t see commodity costs hovering until there’s an exterior issue, equivalent to a geopolitical incident that can not be predicted. The underside line is general vitality continues to be a sexy house. It’s additionally an amazing diversifier for a portfolio.

Hightower’s Zachary Christopher, consumer portfolio analyst, contributed to this column.

Stephanie Hyperlink is chief funding strategist and portfolio supervisor on the nationwide wealth administration agency Hightower Advisors LLC. She leads the agency’s Funding Options Group. Comply with Stephanie on LinkedIn and X. Learn her common market insights right here.