Looking Beyond a Top-Heavy Market: Four Areas for the Future

Wednesday 04 December 2024

Investment Talks

Looking Beyond a Top-Heavy Market: Four Areas for the Future

November 2024 | Underneath the surface of today’s concentrated US equities market, sharp earnings recoveries may soon play out and structural and cyclical changes may create new winning and losing stocks. Although the market is mostly ignoring the valuation risks, we have seen signs that this market imbalance may be ready to unwind. Notably, a higher-than-average amount of S&P 500 returns is explained by company-specific factors rather than macro factors, and valuation dispersion is also high. For active managers, the key is not just to identify pockets of value, but paths to future value through revenue and earnings growth.

01 | Over the past two years, we saw a small portion of the US equities market, including the Magnificent Seven, dominate returns.

02 | This dominance is beginning to equalize as earnings growth from the top stocks slows and the rest of the market accelerates, a process we expect to continue into 2025.

03 | Meaningful structural changes are occurring across many industries, presenting active investors a range of potential opportunities across several key areas. Impacts from the recent US presidential election could also catalyze these shifts.

Looking Beyond a Top-Heavy Market: Four Areas for the Future

Important Information

Unless otherwise stated, all information contained in this document is from Amundi Asset Management as of November 25, 2024. Diversification does not guarantee a profit or protect against a loss. The views expressed regarding market and economic trends are those of the [author] and not necessarily Amundi Asset Management and are subject to change at any time based on market and other conditions, and there can be no assurance that countries, markets or sectors will perform as expected. These views should not be relied upon as investment advice, a security recommendation, or as an indication of trading for any Amundi product or service. This material does not constitute an offer or solicitation to buy or sell any security, fund units or services. Investment involves risks, including market, political, liquidity and currency risks. Past performance is not indicative of future results. Amundi US is the US business of Amundi Asset Management.

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