Surging Markets Mid-Year: Analyzing the Continuation of Record Gains and Potential Volatility

TipsForTraders | June 7, 2024

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As the calendar turns to the midpoint of the year, the financial markets continue their upward trajectory, with major indices like the S&P 500 and Nasdaq Composite setting new records. The S&P 500, for instance, has seen an impressive rise of 12.93% since the start of the year. This surge is largely driven by the burgeoning sector of technology and the ripple effects of the artificial intelligence revolution. However, the sustainability of these gains is shrouded in uncertainty, with speculations about the future moves of the U.S. Federal Reserve and possible election outcomes influencing market sentiments.

The landscape of the U.S. economy and its financial markets is experiencing dynamic shifts, partly fueled by technology stocks and the AI boom. Scott Wren of Wells Fargo Investment Institute highlights the precariousness looming over the markets, citing potential changes in the Federal Reserve’s interest rate policies as a primary source of volatility. With inflation showing stubborn persistence, the Fed might postpone any anticipated cuts in interest rates, which could unsettle markets.

Wren also points to possible disruptions from the upcoming elections, suggesting that unexpected results could trigger market pullbacks. His advice leans towards a strategic rebalization in portfolios, favoring sectors that present less vulnerability to fluctuations in long-term rates compared to tech stocks. Industries such as industrials, energy, and health care are noted for their relative affordability and potential for sustained growth.

Echoing similar sentiments, Jason Yu from U.K.-based Schroders foresees a reduction in the disparity between the market’s giants, referred to as the ‘Magnificent 7,’ and other stocks. His outlook suggests that as 2024 progresses, these lesser-watched stocks might begin to close the gap, offering attractive opportunities for investors.

Further analysis from CNBC Pro, using data from FactSet, focuses on the performance and potential of individual stocks within the S&P 500 and the MSCI World index. Their criteria for standout stocks include a year-to-date performance increase of over 13%, a majority of analysts giving a buy rating, and consensus price targets predicting at least a 20% upside. This approach identifies several candidates poised to excel in the latter half of the year.

Key Takeaways:

  • The S&P 500 and Nasdaq Composite continue to hit new highs, driven by robust gains in tech and AI sectors.
  • Persistent inflation may deter the Federal Reserve from reducing interest rates, potentially inciting market volatility.
  • Upcoming elections pose another risk factor, with unexpected outcomes likely affecting market dynamics.
  • Investment strategies favoring industries with growth potential and resilience against rate hikes—like industrials, energy, and health care—could benefit investors.
  • A shift in focus towards stocks that have been overshadowed by the ‘Magnificent 7’ could reward investors as these entities begin to perform comparably.


As we navigate the remainder of the year, investors are advised to remain vigilant, considering the unpredictable interplay of inflation, interest rates, and electoral outcomes. Rebalancing portfolios towards sectors and stocks less susceptible to these uncertainties could safeguard investments against potential downturns while capitalizing on growth opportunities. The market’s current trajectory presents both challenges and prospects, demanding a strategic and informed approach to investing.