Markets Lift a Half-Full Glass to 2024
At the same time, the economy is nowhere near recessionary levels. On Dec. 21, weekly jobless claims rose by less than forecast, remaining near historic lows and indicating a strong employment environment. In addition, retail sales data for November beat forecasts, showing that U.S. consumers were spending during the holiday season. Add to that an ongoing revival on the housing front, as single-family homebuilding surged to more than a 1-1/2-year high in November and stands poised to gain further momentum in the year ahead.
Meanwhile, there’s still a long-term catalyst brewing around the need for new housing for individuals. Lower mortgage rates in 2024 could only push this forward. These arrows all point to an uptick in housing activity in 2024.
Housing, of course, is a big multiplier for the rest of the economy. If you buy a new house, you’re also going to need new furniture, new appliances, maybe even a new car … you see where this is going.
How I’m Investing Right Now
Looking at the data, now is a good time to optimize a portfolio to be ready to profit off a housing resurgence. Going into 2024, I remain bullish on companies with earnings momentum — benefiting from lower inflation costs, pricing power, restored inventories and secular demand. This includes technology, industrials and discretionary names.
I also think the coming election year will have a big impact on consumer sentiment, ultimately giving it another boost. As I’ve been saying: Don’t bet against the U.S. consumer. As long as the jobs market remains healthy, I see consumer sentiment remaining strong. This is only win-win for overall corporate earnings and the economy.
On the other hand, heading into 2024 I am not as bullish on the mega-cap tech companies that were a huge driver of the S&P 500’s major rally in 2023. Expectations for many of these companies are at exceedingly high levels. While I still expect them to perform in 2024, I don’t expect to see a repeat of the outperformance that we saw in 2023.
There also continues to be a disconnect in the capital raising for the energy space, as a lot of energy companies are continuing to push share buybacks and dividend programs. It continues to be a good place to be, as I don’t see commodity prices soaring unless there’s an external factor, such as a geopolitical incident that cannot be predicted. The bottom line is overall energy continues to be an attractive space. It’s also a great diversifier for a portfolio.
Hightower’s Zachary Christopher, client portfolio analyst, contributed to this column.
Stephanie Link is chief investment strategist and portfolio manager at the national wealth management firm Hightower Advisors LLC. She leads the firm’s Investment Solutions Group. Follow Stephanie on LinkedIn and X. Read her regular market insights here.
