LIVE MARKETS-Healthcare stands out as US earnings growth to broaden - Saxo
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HEALTHCARE STANDS OUT AS US EARNINGS POTENTIAL TO BROADEN - SAXO
Earnings growth in the U.S. is likely to broaden across all S&P 500 sectors for the first time since 2018, according to Saxo’s chief investment strategist Charu Chanana, who highlights healthcare as a particularly promising sector to watch.
"For much of the past two years, U.S. equity gains have been dominated by the “Magnificent Seven” - Nvidia, Apple, Microsoft, Alphabet, Amazon, Meta, and Tesla - now accounting for nearly 30% of the S&P 500’s market cap," Chanana says in an outlook note.
But she says a shift is underway, with earnings growth no longer concentrated solely in tech and consumer discretionary where most of these Mag 7 stocks belong.
"For the first time since 2018, every sector in the S&P 500 is expected to deliver positive earnings growth in 2025."
Tech will remain a core driver of market returns, but areas like healthcare, industrials, materials, and energy show growing potential.
"These sectors stand to benefit from a combination of infrastructure spending, supply chain re-shoring, and innovation," Chanana says.
Healthcare stands out for several reasons, including attractive valuations and structural tailwinds such as aging demographics and advancements in medical technology.
Chanana says investors may benefit by looking beyond the U.S. to diversify their portfolios, pointing out European stocks' deep discount to U.S. equities.
"Looking ahead, MSCI Europe earnings are projected to rise 1.3% in 2024 and accelerate to 6.6% in 2025, led by IT, consumer discretionary, and healthcare."
(Lucy Raitano)
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