After being practically left for dead a year ago, mega-cap tech stocks came roaring back to life—surging to double-digit gains and carrying major indexes like the S&P 500® with them. The American consumer stood strong and kept spending in the face of high inflation and high interest rates—driving surprisingly impressive gains among consumer discretionary stocks. And meanwhile, that long-awaited recession still failed to materialize, leading to unforeseen weakness among defensive sectors like consumer staples.
Investors may be wondering what sectors to invest in for 2024. For the year ahead, which sectors lead and which lag may depend in large part on macroeconomic considerations, which are notoriously hard to predict. If the US decisively avoids a recession and achieves a soft landing, then cyclical sectors like materials, industrials, and consumer discretionary could take the lead. If that recession finally does come knocking, then defensive sectors like health care, utilities, and consumer staples could come into favor.