XOM - ClearBridge Appreciation ESG Strategy Q2 2024 Commentary

2024-07-17 10:15:00 ET

Summary

• ClearBridge is a leading global asset manager committed to active management. Research-based stock selection guides our investment approach, with our strategies reflecting the highest-conviction ideas of our portfolio managers.
• The soft landing rally that gained traction in November 2023 continued through 2024’s second quarter, driven by virtually ideal disinflation data and continued fervor around AI.
• We do not expect the top-heavy market of the second quarter to continue and believe a diversified portfolio with investments focused on durable growth at attractive valuations is best positioned in this transitioning interest rate regime.
• Eliminating waste and pollution, circulating products and materials and regenerating nature are three basic principles at the heart of the circular economy that align with ClearBridge’s fundamental ESG framework.

Top-Heavy Market Likely Won't Continue

By Scott Glasser, Michael Kagan & Stephen Rigo, CFA

Market Overview

The soft landing rally that gained traction in November 2023 continued through 2024's second quarter, driven by virtually ideal disinflation data and continued fervor around AI. The S&P 500 Index ( SP500 , SPX ) has now advanced in six of the past seven quarters (including seven of the past eight months). The second quarter's 4.3% advance left the S&P 500 up 15.3% year to date and an eye-popping 34% off the November 2023 low.

Market performance narrowed from the broad base of the early stages of the current rally. Information technology ('IT') and communication services shares rose 13.8% and 9.4%, contributing 115%, or more than all, of the S&P 500's return. Apple ( AAPL ) and Nvidia ( NVDA ) alone accounted for 76% of the benchmark's return in the quarter. Narrow markets, especially after a large rise, have historically been risky markets. This has us on alert for a correction should the AI frenzy cool....

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