US stock futures dip as Trump’s firing of Cook sparks Fed independence fears
Investing.com - Nearly three-fourths of a typical S&P 500 stock's returns have been driven over the last six months by company-specific factors, rather than broader themes like sector and valuation, according to analysts at Goldman Sachs.
In a note to clients, the analysts led by David Kostin flagged that their analysts indicates that equity markets have been underpinned more by these "micro" trends than on average since the start of 2023.
Over the past six months in particular, 74% of a typical stock's returns in the benchmark S&P 500 have been linked to these developments, versus an average of 58% over the past two decades, Kostin said.
Kostin predicted that this current backdrop will persist in 2025 for three reasons: indications of a healthy growth environment, advancements in artificial intelligence capabilities and adoption, and elevated uncertainty around the new Trump administration's policy plans.
"Looking ahead, debates over trade, tax, fiscal, and other policies represent potential catalysts for additional return dispersion," Kostin said, referring to the standard deviation of returns across different stocks.
Annual return dispersion in the benchmark S&P 500 last year rose to its highest level, outside of recessions, since 2007 -- suggesting a trading environment that favored active investors.
"From a fundamental perspective, the healthy return dispersion environment in 2024 was marked by declining macroeconomic uncertainty and the growing importance of thematic debates around AI and the U.S. election," Kostin said.
Stock-pickers should focus their attention on the consumer discretionary, information technology, and communications services sectors, Kostin argued. Chipmakers like Super Micro Computer (NASDAQ:SMCI), Micron Technology (NASDAQ:MU), Advanced Micro Devices (NASDAQ:AMD), and ON Semiconductor (NASDAQ:ON) were all included in a list of stocks with high dispersion scores, along with battery storage group Enphase Energy (NASDAQ:ENPH) and cruise operator Norwegian Cruise Line (NYSE:NCLH).