The 4Q2024 Quarterly Pulse Check highlights key trends influencing investor sentiment across sectors ahead of earnings announcements:
Industrials & Materials: Investors are cautiously optimistic about a short-cycle recovery but are awaiting stronger data before increasing exposure. They are bullish on the long-term AI cycle, favoring select AI names, airlines, and high-quality companies with unique growth stories.
Telco, Media, and Internet: Market volatility and fluctuating inflation expectations have complicated the Q4 outlook. Strong ad budgets from political spending and brand recovery boosted performance. Connected TV (CTV) and companies with live sports and news exposure remain investor favorites.
Technology: AI remains a key driver across tech sub-sectors, particularly in software, due to monetization opportunities and advancements in agentic AI. While the sector is expected to lead markets in 2025, moderated returns are anticipated, with Nvidia leading semiconductor enthusiasm.
Consumer: The US consumer appears stable, with positive Q4 pre-announcements. Home furnishing and improvement stocks are unexpectedly favorable despite higher interest rates. Investor sentiment is more negative toward packaged foods and beverages but less so for home and personal care products.
Financials: Bank earnings are promising, with investors optimistic despite high expectations. Underweight positions from long-only managers persist, though some caution against focusing solely on historical valuation metrics like Tangible Book Value.
Healthcare: After a challenging 2024 due to clinical trial setbacks and geopolitical factors, MedTech is seen as a promising area for 1H25 due to its resilience to macro and policy risks. Optimism is growing for broader interest in pharmaceuticals and managed care as new policies take shape.
These sector-specific insights reflect diverse challenges and opportunities, with AI and select growth stories playing a central role across industries. (ubs.com)
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