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

FAQs

What sector is best to invest in right now? ›

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.

Banks make money on loans, and they will benefit from rising interest rates. Insurance companies are another stock sector that is likely to benefit from rising rates because much of their portfolio is invested in bonds. In general, the S&P 500 will tend to be a good hedge against inflation over time.

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.

Historically, the industries considered to be the most defensive and better placed to fare reasonably during recessions are utilities, health care, and consumer staples.

What sectors are not doing well? ›

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.

Only 4.1% of sales are made through social commerce in the US. However, Accenture predicts social commerce will grow three times as fast as traditional e-commerce, hitting $1.2 trillion by 2025. Social commerce is expected to see huge gains in categories like clothing, electronics, and home decor.

"We continue to forecast the S&P 500 corrects about -10% to ~4,750 before the end of 3Q 2024 from the recent peak," strategists said in a note on Tuesday. "To be a 'Secular Bull Market' the requirement for over 100 years has been that the S&P 500 continues to make higher highs adjusted for inflation.

The Big Money bulls forecast that the Dow Jones Industrial Average will end 2024 at about 41,231, 9% higher than current levels. Market optimists had a mean forecast of 5461 for the S&P 500 and 17,143 for the Nasdaq Composite —up 9% and 10%, respectively, from where the indexes were trading on May 1.