Equity markets diverged in first half of 2024, with large-cap growth stocks outperforming

From Nasdaq: 2024-07-01 17:10:00

The first half of 2024 saw a divergence in equity markets, with large-cap growth stocks outperforming while breadth narrowed in Q2. Major indices like Nasdaq-100 and S&P 500 led the gains, while small-cap stocks lagged. Some of the biggest companies now have significant index weightings, impacting overall performance.

Sector performance in the first half of 2024 was led by Technology and Communications, with all major sectors posting gains. However, in Q2, six of 11 sectors saw declines compared to only one in Q1. Small-cap companies were particularly sensitive to interest rates, which posed challenges during the hawkish repricing of the yield curve.

Rates rose across the curve in 2024, with the 10yr yield peaking at 4.40%. The Federal Reserve, shifting to a more hawkish stance, now projects only one rate cut by the end of 2024, down from previous estimates. Economic data softened in Q2, with unemployment rising and inflation moderating, leading to expectations of potential Fed rate cuts in the near future.

Corporate earnings for Q2 2024 are expected to show growth in S&P 500 EPS and revenue. Analysts project stronger performance in 2024 and 2025, with overall positive expectations for earnings and revenue growth. As Q2 earnings season approaches, market watchers will be closely monitoring company reports for insights into future market trends.



Read more at Nasdaq:: First Half 2024 Review and Outlook