From Morningstar: 2024-07-11 07:45:00

In the first half of 2024, the Morningstar US Market Index surged 14% supported by strong earnings, a robust economy, and the AI sector. Analysts predict further equity gains, despite risks from high valuations and a narrow market rally. Expectations of just one or two Fed interest rate cuts suggest confidence in the economy’s health.

Market experts foresee continued stock market growth in the second half of 2024 driven by rising AI investments, profits, and potential rate cuts. However, risks lie in a market reliant on key tech firms and high valuations. Diversifying portfolios beyond tech giants may reduce vulnerability and optimize long-term returns.

While economic growth slightly cooled to 1.4% in Q1 2024, analysts project further moderation through early 2025. The slowdown, primarily attributed to the Fed’s previous tightening cycle effects, does not signal a recession. Healthy macroeconomic trends, like consumer spending, may bolster market performance in the upcoming quarters.

Anticipation builds for a Fed interest rate cut in September or December, with markets predicting a 60% chance of a rate reduction in September. Analysts envision a possible series of rate cuts starting in September to tackle anticipated lower inflation and potential uptick in unemployment. The Fed’s approach remains dependent on economic indicators.



Read more at Morningstar: 4 Predictions for US Stocks in H2 2024