emerging
Broadening Equity Market
After a period of concentrated gains in mega-cap tech, the equity market is broadening, with earnings growth expected to accelerate in other sectors.
Timeframe
near-term
Categories
Impact areas
Detailed Analysis
While mega-cap tech has dominated market performance, a broader rally is anticipated as earnings growth expands beyond the "Magnificent 7." "Strong gains were mostly concentrated in the 'Magnificent 7' in 2023 and the first half of 2024, but broader leadership is now emerging and should continue."
Context Signals
Mag 7 earnings growth is projected to decelerate to 20% while the rest of the market accelerates.
Sectors like industrials, energy, materials, and financials are expected to benefit from lower interest rates and potential deregulation.
Increased investor interest in value and mid/small cap stocks.
Edge
Companies with strong balance sheets and exposure to cyclical sectors may outperform.
Active management strategies could be crucial for identifying undervalued opportunities.
The shift towards broader market participation may create more balanced and resilient portfolios.
