The tech sector was certainly the top sector for 2023 with nonstop talks of the Magnificent Seven and AI. However, as markets opened in the new year, the tech sector saw a bit of a sell-off alongside a choppy market start for 2024. Is this a sign of things to come?
The Citadel Finance Professor Paul Meeks joins Yahoo Finance to give insight into the markets and the tech sector moving forward in 2024.
"I don't think we have a fundamental issue. I think the drivers — including the most important driver, artificial intelligence — are still intact as we roll into 2024. But, we simply have come too far too fast, particularly with the explosive move upward in the sector ever since November began, that we're probably due for a little bit of comeuppance," Meeks explains. "But I would wager... that when we get to the end of 2024, the S&P 500 (^GSPC) will have a pretty good year, it will outperform its 10% long-term average."
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Editor's note: This article was written by Nicholas Jacobino.
Video Transcript
- But we have started the new year with a bit of a wobble. The NASDAQ has lost ground for five straight days. All three this week, all three so far in 2024.
Futures pointing to losses once again at the open. This also coming as Apple getting hit by a pair of downgrades on the street. Joining us now to discuss this and more is Paul Meeks. He's a veteran tech investor and currently finance professor at the Citadel.
Paul, thanks for hopping on. I want to talk-- just start with what your view is on what we've seen in tech specifically, the NASDAQ starting this year after a more than 40% gain in 2023. Certainly, one had to expect some level of temperament-- let's say, temperance of the enthusiasm for investors, as we got into this year. Anything concern you in what we've seen over the last couple of weeks? Or does it track with maybe how you would see this market rally evolving?
PAUL MEEKS: I still am pretty constructive on the tech sector. And I think you nailed it on the head. I don't think we have a fundamental issue. I think the drivers, including the most important driver, artificial intelligence, are still intact as we roll into 2024. But we've simply come too far too fast, particularly with the explosive move upward in this sector ever since November began, that were probably due for a little bit of comeuppance.
But I would wager, and, of course, I do it for a living, that when we get to the end of 2024, the S&P 500 will have a pretty good year. It'll outperform its 10% long-term average, not as great as last year, but still a solid year. And the tech sector may not be the top of the class of the 11 sectors, but it's going to be one of the leaders. So the way I look at this is let the profit taking in technology exhaust itself and get prepared to reload on some of these stocks because I think we're going to do quite well.
There's a little bit of angst right now, as Jennifer was talking about, as to the path of rates, specifically, when will we have our first cut? Does it really matter at the end of the day, if it's March, or May, or June? I don't think. So as rates head down, tech stocks and other aggressive growth stocks should do quite well.
So I'm waiting patiently. It's more of a technical call rather than a fundamental call to buy these stocks once the proper taking. And I think that's all it is. And the tech sector exhausts itself.
