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Once again, the indexes Dow Jones e S&P 500 Renews All-Time Highs. On Tuesday (24), they closed at 42,208.22 and 5,732.93 points, respectively, boosted by China's economic stimulus package released yesterday.
And this probably isn't the first time you've come across rising indexes. After all, the American stock market has been on an upward trajectory since the beginning of the year.
To give you an idea, in 2024, the Dow Jones, which brings together 30 traditional companies in the American economy, appreciated more than 11%.
The S&P 500, an index that comprises the 500 largest companies listed on American stock exchanges, grew more than 20% since January and has surpassed its own record 41 times this year.
And if American stock indexes showed good results even during the period of high interest rates, now, with the cycle of interest rate cut signaled by the Fed (American Central Bank), investors' expectations are even greater.
According to Enzo Pacheco, an analyst at Empiricus Research, “the tendency is for companies that lagged behind at the beginning of the year to perform better than stocks that have already appreciated significantly”.
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Learn about US stocks to diversify your portfolio and prepare for possible sector rotation
Since 2023, much of the performance of the US stock market has been “carried” by the performance of “Magnificent Seven“, the industry’s leading technology companies: Nvidia, Microsoft, Amazon, Meta Platforms, Alphabet, Apple and Tesla.
The highlight goes to Nvidia (NVDA), which has already jumped +150% in 2024 alone.
However, with the economic recovery caused by interest rate cuts, it is the actions in traditional sectors of the economy that can come out on top in this scenario, according to Enzo Pacheco. This is because these have discounted multiples due to their timid performance in the first half of the year and are therefore cheap.
This is why many analysts have already pointed out the process of “sectoral rotation”, that is, the redirection of the focus on Big Techs to previously neglected actions. See which ones the analyst recommends to expose themselves in other sectors.
Of course, this doesn’t mean that tech giants will stop posting earnings growth. It does mean that growth could slow, while companies that were lagging in previous quarters could start to improve.
Therefore, Enzo Pacheco advocates a diversified portfolio, both with Big Techs and with shares of companies in traditional segments.
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