Leaders-Laggards

Even as cyclicals pull back, financials continue to be a market leader in 2024. The recent bounce could be due to a couple of factors. Consumer staples stocks have really benefited by falling into the market’s sweet spot right now. Stock/bond correlations have turned negative again and that’s definitely a good thing for investors.

Consumer spending figures look good, but they’re increasingly needing to use credit card debt and “buy now, pay later” schemes to make it happen. As housing supply continues to grow, as it has been for a couple months now, expect the demand for lumber to only weaken from here. Latin America has been a mixed bag, but many Asian and African equity markets have delivered double digit gains over the past few months.

The markets continue to recover in anticipation of Fed rate cuts finally starting in September, but tech has so far not been the go-to sector of choice for investors. We’re starting to see a repeat of July, where small-caps benefited from the great rotation. Now that the Fed has acknowledged the labor market as a growing issue, we could soon see investors start to react by moving to Treasuries.