Benzinga - by Surbhi Jain, .
2023 was a good year for the stock market, as the broad market S&P 500 Index, and ETFs tracking it such as the SPDR S&P 500 ETF (NYSE:SPY), the iShares Core S&P 500 ETF (NYSE:IVV) and the Vanguard S&P 500 ETF (NYSE:VOO) ending the year with 25% gains.
Last year’s stock market returns were primarily driven by the Technology sector which gained over 55% on aggregate, and the Communication Services sector which rose about 50% on average. Investors are now wondering which sectors will shine in 2024.
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According to Fidelity’s sector managers, the sectors that will lead and those that will lag may depend in large part on macroeconomic considerations. If the U.S. avoids a recession and achieves a ‘soft landing,’ the most compelling potential opportunities for this year lie in the following cyclical sectors:
- Materials
- Industrials
- Consumer discretionary
Materials
Fidelity sees long-term investment potential in a number of segments of the sector that have shown favorable supply-and-demand dynamics, including among copper miners and U.S. chemical manufacturers.
The Materials sector is broadly tracked by the Materials Select Sector SPDR ETF (NYSE:XLB) and the Vanguard Materials ETF (NYSE:VAW).
Industrials
An improved U.S. economy could provide a short-term boost. Opportunities for 2024 include commercial aerospace, utilities infrastructure, residential construction, and shipping companies within this sector.
Broadly, the Industrials sector is tracked by the SPDR Select Sector Fund – Industrial (NYSE:XLI) and the Vanguard Industrials ETF (NYSE:VIS).
Consumer Discretionary
Looking ahead to 2024, Fidelity believes this sector’s trajectory might still hinge on broader factors like the economy’s health and interest rate trends. Retailers with appealing valuations and defensive business strategies, potentially shielding them from economic downturns, are the ones that could stand out.
The Consumer Discretionary sector is tracked by the SPDR Select Sector Fund – Consumer Discretionary (NYSE:XLY) and the Vanguard Consumer Discretion ETF (NYSE:VCR).
Now Read: US Economy Set For ‘Soft Landing’ As Economists Eye Fed Rate Cuts
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