Investing in sectors | 2024 Outlook for investors | Fidelity (2024)

FAQs

Is sector investing a good investment? ›

Sector investing can help investors enhance diversification or invest opportunistically. By investing in multiple sectors across the equity market, investors can help protect against the risk of any one sector lagging in the broader stock market.

Since 2023, industries such as clean energy, AI, finance, and banking appeared as promising opportunities for investors.

Fed Projections

In its latest long-term economic projections released in December, the Federal Open Market Committee projects core PCE inflation of 2.4% and GDP growth of 1.4% in 2024. FOMC members also anticipate just three interest rate cuts by the end of 2024.

Several asset classes perform well in inflationary environments. Tangible assets, like real estate and commodities, have historically been seen as inflation hedges. Some specialized securities can maintain a portfolio's buying power, including certain sector stocks, inflation-indexed bonds, and securitized debt.

Sector trading is a form of active trading that might involve a higher level of risk than investing in the broad stock market. What are the worst sectors to invest in? The worst sectors to invest in are information technology, energy, utilities, and materials.

Higher Risk: Sectoral funds are generally riskier than diversified funds because they are more narrowly focused. The performance of the fund is heavily dependent on the performance of the sector it invests in. If the sector experiences a downturn, the fund's returns may suffer.

Certain sectors may offer high growth potential due to economically driven investing catalysts; however, investing in a specific sector has a high risk potential and more volatility as it is a concentrated investment with no economic diversification.

The S&P 500 utilities and consumer staples sectors are two of the worst-performing sectors in the large-cap benchmark index this year, down 10.6% and 2.4%, respectively.

Health and Insurance Sector

According to Invest India, the health sector is likely to grow by 16-17% and is about to hit $372 billion by 2024. The major components of the health and insurance sector are hospitals, Diagnostics, Medical insurance, Medical equipment, Pharmaceuticals, and supplies.

We continue to forecast about 4% average 2024 GDP growth for emerging markets worldwide, led by growth of about 5% for emerging Asia. We anticipate growth of 2%–2.5% for emerging Europe and Latin America, though U.S. growth could have positive implications for Mexico and all of Latin America.

What is the S&P 500 prediction for 2024? ›

Analysts expect overall S&P 500 earnings to rise 10.4% in 2024, LSEG data showed. But stocks are also at high valuation levels. The S&P 500 trades at a forward price-to-earnings ratio - a commonly used metric to value stocks - of 20.9, well above the index's historic average of 15.7, according to LSEG Datastream.

Through Thursday, the venerable index had returned 3.7% for 2024, with dividends reinvested. The S&P 500 SPX was down only slightly for the day and had returned 11.1% for 2024. Now take a look at financial performance that can drive stocks higher over the long term. The S&P 500 is weighted by market capitalization.

Think about the things consumers will need no matter what – those are the sectors that tend to perform well during market downturns. Even amid high inflation, people still need gas, groceries and health care, so things such as consumer staples and utilities usually weather bear markets better than others.