Up or Down Next? A few sectors might stay strong anyways

April 28, 2024 Update

The NASDAQ had a strong recovery last week (up 4.2%):

In the very short term, the market was oversold and a bounce was a possibility. Now the question is… what’s next?

Here is what I like: The economy keeps improving and the current GDP Nowcast for Q2 sits at almost 4%!

And what I don’t like: inflation is picking up again, slightly, and there are no signs of it moderating any time soon. Oil and some commodities are ticking higher and as a result of all of this, the 10-year treasury yield is up for the 4th week in a row and that does not bode well for growth stocks.

So what? I don’t see the market doing badly if the economy stays strong. Yet, growth stocks may suffer if inflation keeps pointing up. So I would stay open to considering buying cyclical stocks, especially from sectors that are less sensitive to high interest rates.

Last consideration: interest rates are high compared to where they were a few years ago. Yet, real interest rates (nominal - inflation) are not high per se as they …