Amundi, a European asset management firm, has forecasted a slowdown in the growth of the U.S. economy, which could lead to a decline in the performance of top stocks in 2024.
What Happened: Amundi, with $2 trillion under management, anticipates a less robust economic growth in the upcoming year, which could result in a weaker performance from the leading mega-cap stocks, reported Business Insider on Saturday.
In a panel discussion at the New York Stock Exchange, Craig Sterling, the head of equity research at Amundi U.S., stated that the firm is underweight on U.S. stocks for 2024. He highlighted the significant difference between the current stock market and that of a year ago.
Sterling attributed the outperformance of these stocks to the low earnings expectations. However, he warned that this trend might not continue, especially with the market’s tendency to overestimate the short-term impact of new technologies.
“While we would expect the Mag 7 to trade at a premium to the overall market given mostly superior growth and margins, the concentration of the top of the market and its valuation gap with the average stock is historic,” said Sterling.
He added, “This dynamic generally does not end well.”
Why It Matters: The forecast by Amundi aligns with the mixed predictions for the 2024 economic outlook. Wells Fargo predicts a slowdown in the economy, with an anticipated growth rate of only 0.8%, which could lead to significant cuts in interest rates by the Federal Reserve.
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