The Outlook for the Energy and Basic Materials Sectors in 2024

What to Expect for the Energy and Basic Materials Sectors

The energy and basic materials sectors are facing a challenging year ahead in 2024. Analysts are predicting that these sectors will drag down overall market performance, with expectations for full-year declines in EPS growth. This is in stark contrast to other sectors, which are generally expected to see positive growth in the coming year.

2025 S&P 500 EPS Growth Rate

Despite the challenges facing the energy and basic materials sectors, the overall outlook for the S&P 500 remains stable. The expected EPS growth rate for 2025 has held steady at 14-15%, showing resilience in the face of sector-specific headwinds. This is an improvement from earlier projections in May-June ’23, when analysts were forecasting a lower growth rate of 11%.

Forward Calendar Year EPS Estimates

One positive sign is that there has been little downward pressure on the forward calendar year EPS estimates for the S&P 500 as a whole. This suggests that the broader market is holding up well, despite the challenges in specific sectors. Credit markets are also not showing any indications of an imminent recession, providing further reassurance for investors.

Impact on Individuals

For individual investors, the outlook for the energy and basic materials sectors may have implications for their investment portfolios. If you are heavily invested in these sectors, it may be wise to reassess your holdings and consider diversifying into other areas that are expected to perform better in 2024.

Global Impact

The struggles facing the energy and basic materials sectors in 2024 could have broader implications for the global economy. These sectors play a key role in the production of essential goods and services, so any decline in their performance could potentially impact supply chains and prices worldwide. It will be important to monitor these developments closely in the coming months.

Conclusion

While the energy and basic materials sectors are expected to face challenges in 2024, the broader market remains resilient. Investors should stay informed about sector-specific developments and consider adjusting their portfolios accordingly. The global impact of sector declines underscores the interconnected nature of the economy, highlighting the need for vigilance and adaptability in a dynamic market environment.