Outside GDP, economic indicators generally suggest deceleration, although growth continues at a subdued level. April retail sales were unchanged from March, extending the weak PCE performance in first-quarter GDP. US factory orders rose 1.6% in April, while durable goods orders rose 0.7%. Industrial production dipped 0.3% in April, and capacity utilization of 78.4% was 1.2 points below its long-run (1972-2023) average.Given the realities of the current environment, we lowered our forecast for 2024 GDP growth to 1.8%, from a prior 2%. Our expectations for 2025 GDP growth are in the 2% range.Still, six months into 2024, the market is showing impressive sector breadth. Unlike in 2023, the top growth-focused sectors are barely beating the market rather than trouncing it as they did a year earlier. Seven sectors are either tracking or beating the S&P 500.Beyond summer, investors are bracing for what could be the most partisan election in the modern era. Yet they are simultaneously anticipating the first rate cut in this cycle, which would also be the first rate cut since the COVID-19 pandemic.We have adjusted our recommended sector allocations, as we do each quarter at the beginning of March, June, September, and December. The following reflects our guidance for the calendar third quarter of 2024.Although we use a quantitative, six-part, “blind” sector model, our sector recommendations tend to align with qualitative and fundamental dynamics in the market outlook. We have raised the Energy sector to recommended Market-Weight from recommended Under-Weight.Energy demand appears to have stabilized, as initial consumer euphoria over EVs has cooled, and global economic recovery has put petroleum supply and demand into relative balance.
About the Author
John Eade is CEO and President of Argus Research Corporation. He has been with Argus since 1989 and has worked as an analyst, director of research, market strategist, and director of portfolio strategies at the firm.Mr. Eade has an MBA in finance from New York University’s Stern School of Business and a Bachelor’s degree in journalism from Northwestern University’s Medill School of Journalism. He has been involved with Argus’s new product development team, which has kept the company at the forefront of the independent research industry.Mr. Eade is a founder and board member of the Investorside Research Association, an industry trade organization. He is also a member of the New York Society of Security Analysts and the CFA Institute. Mr. Eade has been interviewed and quoted extensively in The New York Times, The Wall Street Journal, Forbes, Time, Fortune and Money magazines, and has been a frequent guest on Fox Business News, CNBC, CNN, CBS News, ABC News and the Bloomberg Radio and Television networks.More By This Author:Inflation: A Deeper Dive Into The CPI – And What It Means For MarketsTech: Yes, The Best Players Are Scoring A Lot Of Points – And That’s NormalH2 2024 Outlook: What Our Data And Market Action Say About The Rest Of The Year
