Jeremy Siegel: New Stock Winners Starting to Emerge

U.S. economic data looks very good for financial markets, according to economist Jeremy Siegel.

Citing recent strength in value and small-cap stocks, the Wharton School professor suggested that those equities will experience a long-term boost once the Federal Reserve lowers interest rates.

Gross domestic product grew at roughly 2% in the first half of 2024, and “while not spectacular, is certainly far from recessionary conditions. This level of growth, accompanied by slight inventory accumulation, suggests a stable economic backdrop,” Siegel wrote in his weekly WisdomTree commentary Monday.

Jobless claims have stabilized around 240,000, “a positive sign that does not indicate any troubling uptrend. This stabilization in jobless claims is crucial and aligns with other indicators we’re monitoring,” he said.

While a key inflation indicator, the Personal Consumption Expenditures Price Index, recently showed a slight uptick year over year — the index rose 2.5% from a year earlier — Siegel wrote, “The overall trend for inflation is softening and approaching the Federal Reserve’s 2% target.”

Commodity prices have trended downward, which the economist also called a positive sign.