Which sectors of the S&P 500 Index will show high growth
The current year has brought challenges to all markets. Even the most resilient businesses are showing declining profits, and the value of technology giants, which used to grow rapidly, is falling. To understand where the stock market is heading, analysts forecasted the development of major indices, including the S&P 500. The index is expected to increase by 25.7% over a 12-month period. At the same time, sectors will develop unevenly.
It should be noted that the result of 25.7% was obtained by the difference between the target opening price and the mark at the closing of the index on a particular number. For this purpose, the analysts summed up all the average indicators of the companies whose shares form the index. At the time the forecast was created, the S&P 500 had an opening price of 4,724.3p and a closing price of 3,757.9p.
For almost 6 months the index has been showing falling positions, but since the end of July, the situation has stabilized. During the first half of the year, the index valuation decreased approximately by 11%.As for analysts on the sectors that make up the S&P 500, here they forecast growth of almost 38% in communications services. The information technology segment will show an increase of 31.3%, and the real estate market by almost 31%. The least expected growth will be in the energy sector, which will increase by about 10%. Consumer goods companies will improve by 14.2%.
The top three in the index will be telecommunications company Dish Network, Generac Holdings, which represents the energy sector, and Caesars Entertainment, a chain that operates casinos and hotels. Clorox, which makes consumer products, energy business Consolidated Edison and utility company Pinnacle West Capital is expected to perform the least well.
It should be understood that analysts’ forecasts are not always correct. Over the past 5-10 years, experts have demonstrated an average mismatch in the range of 1%. At the same time, analysts often overestimate the indicators, which leads to further adjustment of expectations.
Meanwhile, the S&P 500 index continues its fall, the reason for which can be identified by two factors – high inflation and a tightening of monetary policy by the Fed to reduce it. At the moment, the inflation rate in the U.S. reached its maximum value for the last 50 years, and record indicators are also observed in other countries with strong economies. To slow the dynamics, the Fed was forced to raise the key rate to 3.25%, which led to a serious drop in the market and panic among investors. At the same time, experts warn that by the end of the year the rate may exceed 4%, which will primarily affect the companies in the technology sector.