While the American gross domestic product (GDP) grew by 2.5% in 2023, according to the statistical office of the Department of Commerce (BEA), specialists expect the economy to continue to grow dynamically in 2024. And as the galloping inflation of recent months now seems under control, it is not excluded that the American Federal Reserve (Fed) will begin, this summer, a new cycle of lowering interest rates likely to relax the cost of credit, therefore further supporting economic activity.
Despite the uncertainty linked to the results of the November 2024 presidential election, investors remain confident in the prospects for growth in corporate profits. As proof, the S&P 500, the main American stock index, has increased by almost 10% since the start of the 1er January 2024, after the increase of around 25% recorded in 2023.
However, this performance is now very dependent on that of “magnificent seven”namely Gafam – Alphabet (Google), Amazon, Meta (ex-Facebook), Apple and Microsoft –, to which are added Tesla and Nvidia, one of the main manufacturers of electronic chips for players in artificial intelligence , recalls David Cohen, co-manager of the Robeco BP US Large Cap Equities fund. “The sharp rise in their prices largely explains the current dynamism of the stock market in the United States, given their heavy weighting in stock market indices. It is, for example, almost 30% for the S&P 500 index”he explains.
The increase in the price of these seven stocks continued at the start of 2024. It thus enabled the main stock market indices to establish new historic highs, starting with the S&P 500: it now exceeds the level of 5,000 points, well beyond its previous records, dating from January 2022.
Performance largely in the green
Will this trend continue in the coming months, as the November presidential election approaches? If “Current valuation levels for US stocks are a little higher than their historical average. However, they remain supported by solid profit prospects, particularly in the technology segment, the driving force behind the recent market rise”underlines Christophe Nagy, manager of the Comgest Growth America fund, within the management company Comgest.
In practice, investors wishing to position themselves on the American equity market can turn to an equity mutual fund or FCP (mutual fund), specialized in this theme. Several hundred funds implementing this type of investment strategy can be subscribed to by French savers. The best of them have performed largely in the green since the start of 2024. To put all the chances on your side, it is better to choose a active management fund with a solid performance history.
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