A few years back, as editor of a technology magazine, I interviewed Guy Kawasaki at the New Media Expo in Los Angeles, a trade show devoted to bloggers, podcasters, and web designers. If you’ve never been to one of these expos, they’re a cross between a Star Trek convention and a punk rock concert.

Kawasaki is a Silicon Valley celebrity. More like a god, actually. He’s a marketing specialist, author, and venture capitalist. While working at Apple (NSDQ: AAPL) in the 1980s, Kawasaki spearheaded the marketing of the Macintosh computer line.

As I observe the main U.S. stock market indices continue to notch record highs, something Kawasaki told me comes to mind: “Defy the crowd. The crowd isn’t always wise. It can also lead you down a path of silliness, sub-optimal choices, and downright destruction.”

Indeed, contrarianism is a guiding principle of Mind Over Markets. And right now, the contrarian in me senses the danger over the near-term horizon of a pullback in equities.

Stocks hover at all-time peaks, despite the uptick in bond yields. Valuations are lofty, especially in the technology sector. Fear Of Missing Out (FOMO) seems to be in full swing.

I’m generally bullish on the stock market’s prospects in 2024, but caution is warranted as well. Let’s review the latest investment context and what it might portend as we face the start of the second quarter.

Throughout much of 2023, market movements mirrored Federal Reserve policies. During the latter part of that year, bond yields retracted significantly while equity markets surged. The downward trend in bond yields towards the end of 2023 stemmed from diminishing inflation and signals from the Fed of a probable halt in interest rate hikes.

Transitioning into 2024, bond yields experienced an initial rise. Nevertheless, unlike the turbulence witnessed in mid-2023, stocks continued their upward trajectory. This resilience in equity markets amid higher interest rates is attributed to robust economic expansion and healthy corporate earnings.

During last week’s Federal Open Market Committee (FOMC) meeting, the Fed’s projections hinted at the possibility of three 0.25% interest-rate cuts in 2024, despite inflation readings surpassing expectations in the preceding months.

Anticipated cuts in interest rates align with the prevailing market sentiment, with futures markets pricing in approximately three such cuts for the year, with a probability of around 70% for the first cut to occur during the June meeting. That said, Wall Street is betting that the Fed will stand pat at its April-May meeting (see chart).

Source: CME Group’s FedWatch Tool

The Fed’s decision to maintain policy rates within the range of 5.25% to 5.50% in last week’s announcement was in line with market expectations.

The release of the personal consumption expenditures price index (PCE), a key metric for inflation, is scheduled for Friday. Given the Fed’s heavy reliance on this inflation gauge for policy decisions, this PCE report (especially the “core” reading) will be pivotal.

Wall Street expects that inflationary pressures will continue to ease in the coming months, laying the groundwork for rate cuts at the June meeting. But along the way, we’re likely to get “noise” within the inflation data that triggers volatility.

This bull market has long-term durability but it’s also vulnerable to correction triggers, such as unexpectedly hot inflation readings that send bond yields higher.

Run with the bulls…not the lemmings. Now’s the time to pick up value plays in sectors that have been out of favor, as the laggards of 2023 transition into the leaders of 2024. Sectors to consider now include utilities, which tend to benefit from falling rates.

I’m particularly bullish on utilities stocks right now, a traditional defense sector that’s poised to prosper in the coming months. In fact, among the publications that I edit is our premium trading service Utility Forecaster. My colleague Robert Rapier is the chief investment strategist.

Do you seek peace of mind in today’s uncertain investment climate? As you position your portfolio for the rest of 2024, make sure you have exposure to utilities stocks. These stable, high-dividend stalwarts provide shelter from the storm.

Utilities stocks offer growth, income, and asset protection. That’s an unbeatable combination. But you need to pick the right ones. For our list of the highest-quality utilities stocks, click here now.

John Persinos is the editorial director of Investing Daily.

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This article previously appeared on Investing Daily.