7 Game-Changing Stock Market Trends You Can’t Ignore in 2024

Though it may not seem so, this year’s stock market trends have yet to materialize fully. Artificial intelligence drove 2023’s stock market trends; in years past, electric vehicles, meme stocks, and even blockchain tech drove market movements. And, of course, macroeconomic cycles and monetary policy shoulder their share of the burden when it comes to driving stock market trends – but, again, 2024’s prospects remain unclear.

AI is still on a tear, though wide enthusiasm is cooling as many companies integrating “AI” have yet to show how doing so materially affects their bottom line. Crypto ETFs seemed as though they’d drive major market moves, but thus far, wide market sentiment is less than exuberant.

Likewise, markets are pricing in rate cuts and improved economic prospects one day and fleeing to safety the next. Ultimately, 2024’s primary stock market trends will be marked by uncertainty and instability, judging by its first month and a half.

But that could easily change, and smart investors forecast far in advance to pin down the next top stock market trends. We’ll look at a recent Citi report detailing some of the top stock market trends that may materialize this year that, in their words, are high-conviction, near-term trades (not necessarily buy-and-hold candidates) that could prove more profitable than other trade ideas.

Semiconductor Equipment Makers

Semiconductor stocks were a niche but somewhat popular stock market segment – until AI and other advanced tech burst on the scene, creating massive demand for advanced semiconductors. That pivot marked some major stock market trends of the past few years, including Nvidia’s (NASDAQ:NVDA) meteoric rise. But that sudden influx of investor enthusiasm toward chipmakers created an interesting dynamic: chipmakers’ collective market cap now outweighs those of upstream producers or, in Citi’s words, “there is less optimism for the ‘picks and shovels’ than for the ‘silicon gold miners.’”

This is a unique scenario and one that could prove profitable for those willing to trade the misalignment. Think about it: car manufacturers like Tesla (NASDAQ:TSLA) or Ford (NYSE:F) have baked-in consumer sentiment and brand loyalty that, in part, drive investment capital. That’s why you’ll generally profit more from directly investing in the manufacturers rather than their suppliers.

From a practical standpoint, though, chipmakers have little to set themselves apart from one another, especially as the tech advances. Furthermore, we’re likely going to see mega-corporations like Google (NASDAQ:GOOGL, NASDAQ:GOOG) get into manufacturing themselves in a bid to reduce costs and reliance on outside sources. Just look to OpenAI’s ongoing battle for proof – the future doesn’t lie in a handful of differentiated semiconductor manufacturers. Instead, look upstream to the “pick and shovel” companies that profit no matter which chipmaker is dominant at any given time.

Stocks to watch: Aehr Test Systems (NASDAQ:AEHR), Fabrinet (NYSE:FN), Onto Innovation (NYSE:ONTO)

2024 Stock Market Trends: Cybersecurity

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Many factors, including artificial intelligence, geopolitical wrangling, and increased reliance on digital interaction, massively increase the risk and damage caused by cyber threats, hacks, and device infiltration. To that end, cybersecurity stocks will become increasingly critical as smaller companies (unable to develop protocols in-house) fight for safety. Even large companies (again, like Google), need third-party assistance sometimes and “choose to contract with outside vendors to substantially augment in-house capabilities.”

To that end, cybersecurity stocks are on an earnings tear, with the collective class growing their EPS by 36% in 2022 and 14% as of Q3 2023. But, despite the earnings improvement, the asset class’ collective forward price-to-earnings ratio sits at just about 20x, lower than it has been since 2016 (aside from 2020’s brief market-wide “crash”). This offers investors a unique value play that you don’t often see across an entire investment class.

Stocks to watch: Fortinet (NASDAQ:FTNT), CrowdStrike (NASDAQ:CRWD), Check Point Software Technologies (NASDAQ:CHKP)

Western Energy Production

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Two major energy shocks – the Russian/Ukrainian and Israeli/Palestinian conflicts – are creating a unique opportunity for Western energy producers. With Russia and Iran producing nearly 20% of the world’s energy supply, NATO and some non-allied countries are increasingly looking to the world’s largest producer and consumer: the United States, which produces more than 18% of the global supply on its own. Add the rest of the West to the equation, and 23% of the global supply is accounted for – a segment that the world is increasingly reliant upon.

Furthermore, OPEC’s continued pledge to cut production (and raise pricing) will be a net benefit for Western producers as higher pricing means costlier methods that thrive in the U.S. (like fracking) are once again profitable and viable. Though green tech is ascendant, keeping options open and maintaining flexibility with fossil fuels is an ongoing mandate – and one that benefits cheap Western energy producers, as well as those investing in them.

Stocks to watch: Occidental Petroleum (NYSE:OXY), Cheniere Energy (NYSE:LNG), United States Oil ETF (NYSEARCA:USO)

2024 Stock Market Trends: Copper Mining

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Of course, ascendant green tech means plenty of opportunity in alternative energy sources. Citi points to copper mining as a major opportunity because, in their words, “we see high future demand, restrained supply, and no substitution” alongside forecasts that copper pricing will increase as green tech. Other research supports the thesis. Analysts point to Fed rate cuts (and their effect on the dollar’s value), higher renewable targets, and improved global economic health as factors directly contributing to copper’s unique upside opportunity.

The lattermost point is what sets copper apart from other metals that green tech demands. Whereas, for example, lithium is a key component for EVs and batteries broadly, copper is a component of nearly every green tech innovation. What’s more, copper is key to broad industrial uses that accelerate and grow as economic conditions improve – creating a dual-prong approach that benefits copper investors on multiple fronts.

Stocks to watch: Southern Copper Corp (NYSE:SCCO), BHP Group (NYSE:BHP), Teck Resources (NYSE:TECK)

Medical Technology

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Medical technology is one of my perennial go-to investment themes that I think will be a major driver of returns for investors in the future. MedTech is one of those sectors where innovation is constant and demand is eternal – creating a convergence that turn small-cap companies into major players a few years down the line.

However, investing in specific MedTech companies is tricky, especially in an era where higher borrowing costs make pre-revenue companies (primarily biotech) tough investments. Likewise, many of the hottest MedTech stocks came crashing back down to earth as post-pandemic realities set in. Meanwhile, some of the larger names, like Medtronic (NYSE:MDT) stay fairly stagnant.

Citi points to increased innovation, including AI and bottom-barrel pricing, as major factors driving MedTech stock market trends moving forward. Specifically, analysts forecast that smaller firms will likely get snatched up with increasing regularity as larger firms see the current MedTech landscape as ripe for mergers and acquisitions. This stock market trend will benefit small-caps most, as they tend to be the ones subject to high-priced M&A proceedings.

Stocks to watch: Recursion Pharmaceuticals (NASDAQ:RXRX), Clearpoint Neuro (NASDAQ:CLPT), iShares Genomics Immunology and Healthcare ETF (NYSEARCA:IDNA)

2024 Stock Market Trends: Japanese Stock Strength

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Japan is quietly undergoing a resurgence, making investing in the country’s top companies one of the most pivotal stock market trends in 2024. Of course, Japan’s economic strength came from a string of soft monetary policy initiatives that created one of the weakest currencies among global developed markets today.

Unlike most Western nations, Japan’s central banking leaders kept rates low post-pandemic to grow its economic base further. This paid off handsomely, at the cost of a weakened yen. To that end, Japan’s inflation averaged just 3.6% for the past two years, meaning regulators accomplished their mission and may soon pivot to a more hawkish policy to prevent slippage.

These factors create a three-pronged opportunity: investment in Japanese tech stock strength, direct currency investment, and investment in major Japanese banks that will benefit from higher net interest income as rates rise.

ETFs to watch: iShares MSCI Japan ETF (NYSEARCA:EWJ), Invesco CurrencyShares Japanese Yen Trust (NYSEARCA:FXY), WisdomTree Japan Hedged Equity ETF (NYSEARCA:DXJ)

Defense Contractors

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Citi calls current geopolitical strife “simmering, longstanding conflicts explod[ing] into major wars once again,” offering unique benefits to defense investors. Specifically, the world’s realignment into an East/West Cold War-esque paradigm could reinvigorate defense spending as innovation arms racing comes back to the fore. At the same time, ongoing preventable supply chain issues, like today’s Red Sea Crisis, demand greater defense investment to both counter the direct threat and open logistics channels to support defense contractors themselves.

Of course, the biggest names in defense tech tend to be behemoths laboring under their own weight; look to Boeing’s (NYSE:BA) ongoing debacle for proof. To that end, look to smaller defense stocks – particularly those with diversified consumer bases and that emphasize next-gen tech like autonomous aircraft and AI. These companies tend to do what they do very well, unlike, again, Boeing’s ongoing mishaps that are at least partially attributable to spreading themselves too thin and focusing on short-term profit over long-term engineering excellence.

Stocks to watch: AeroVironment (NASDAQ:AVAV), Palantir (NYSE:PLTR), OSI Systems (NASDAQ:OSIS)

On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.