Summary
When it comes to focusing on sectors of the S&P 500, we think it makes sense to focus primarily on a few key sectors that can actually make a difference in terms of earnings and portfolio performance. As an example, the Real Estate sector, which accounts for about 2% of S&P 500 capitalization, is expected to contribute only 1% of S&P 500 EPS during the during the upcoming 3Q24 EPS period (which will kick into gear next month). The Materials sector is another 2% market weight that generates a thin 2% of total earnings. We don’t think clients should be spending a lot of time on deep dives trying to get these sectors right. The groups that really make a difference are going to be Information Technology, which is expected to account for 22% of the earnings (and grow at a 15% rate year over year); and Financial and Healthcare, which are expected to account for 18% and 13%, respectively. Perhaps not surprisingly, these are three economic sectors in which the United States enjoys competitive advantages versus other nations. At the next tier, the Industrial, Consumer Discretionary,
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