TV stock market expert Jim Cramer expects some new developments on the US stock market in 2024. So previous stock market favorites are likely to lose the favor of investors – for the time being – and other, more boring stocks will be in demand.
• Jim Cramer expects sector rotation away from Big Tech
• Neglected, boring titles are likely to get more attention again
• USmonetary policy should continue to set the course for Wall Street
The year 2024 got off to a rather bumpy start for the major US indices. While the Dow Jones Industrial was able to gain slightly on the first trading day of the year, the S&P 500 fell slightly, while the NASDAQ Composite lost a significant 1.6 percent. TV presenter and stock market expert Jim Cramer sees this as the first signs of a sector rotation taking place, which occurs more often at the beginning of the year – especially after a bull run like 2023.
Cramer expects “new market”
As Jim Cramer explained in his “CNBC” show “Mad Money”, investors would increasingly doubt that the rally in the big tech stocks will continue in 2024 – and he also believes that the run in the so-called “Magnificent Seven” – namely Alphabet, Amazon, Apple, Meta, Microsoft, NVIDIA and Tesla – cannot continue like this. This year, this will be reflected in a sector rotation on Wall Street, with tech stocks acting as sources of money from which funds will be withdrawn to invest in other companies. “My crystal ball is that people will take profits from the best of the best, the ones who defined this market, yes, the Magnificent Seven and their friends,” Cramer said. This money will then flow into companies “that have not enjoyed respect for ages” and were therefore ignored until recently, according to the stock market expert.
According to Cramer, in 2024 what will be needed instead of Big Tech are companies from the food, pharmaceutical and finance sectors, which are now valued too cheaply compared to the winners on the market. Among other things, he cited the US pharmaceutical company Merck & Co. and the food company General Mills as examples in his broadcast, whose shares stagnated or fell significantly in 2023. The new winners would also include financial stocks such as JPMorgan and, above all, dividend stocks. “This is a new market […], in which mega-cap tech stocks are no longer leaders. It’s a market where money is invested in a lot of boring, higher-yielding stocks, as well as smaller stocks, healthcare, banks, REITs and utilities.”
According to Cramer, the rotation away from Big Tech could be “brutal” for some stocks, but is likely only temporary. Because the Magnificent Seven are still great companies, even if the market has temporarily lost love for them. However, investors shouldn’t worry because “the seven will eventually return to their rightful place,” said the “CNBC” host. There will therefore also be an opportunity to buy these shares at a lower price in 2024. “Wait patiently for the sell-off that I expect and then make some purchases,” Cramer recommended.
Fed policy will continue to point the way for Wall Street in 2024
According to Cramer, the sector rotation away from tech stocks and towards dividend stocks in 2024 is also due to the fact that more and more investors believe that the US Federal Reserve will soon cut interest rates. Because a relatively secure return through dividends becomes more valuable again when interest rates are lower. According to the stock market expert, this also shows that the Fed’s policy in 2024 – as in the previous year – will be decisive for movements on the US stock market.
However, Jim Cramer advised investors not to be the type of investor who focuses too much on the Federal Reserve’s decisions and tries to predict and question them. Instead, investors should invest in the stocks of companies that they believe have solid management and are valued appropriately – i.e. not significantly higher than the average in the S&P 500.
Editorial team finanzen.net
This text is for informational purposes only and does not constitute an investment recommendation. finanzen.net GmbH excludes any claims for recourse.
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