On June 24th, CITIC Securities reported that we believe the upward trend in US banking system reserves and the performance recovery of the "Big Seven" are the two driving forces behind the bull market in US stocks since October 2022. Looking ahead to 2024H2, we predict that the US stock market will experience a trend of performance recovery and diffusion. After six consecutive quarters of negative growth, the profits of the S&P 500's constituent stocks, excluding the "Big Seven," are expected to turn positive in Q2 2024. The growth in performance is also expected to drive further increases in buybacks by listed companies, and the huge amount of funds accumulated in the stock market may also become a source of incremental funds for the US stock market after the Federal Reserve starts the interest rate reduction cycle. However, the current trading congestion in the US stock market has reached the highest level since this bull market, and indicators such as PE, free cash flow returns, and shareholder returns also indicate that the blue chip valuations in the US stock market are too high. If the Federal Reserve continues to shrink its balance sheet even after excess liquidity in the US financial system is depleted, US stocks may face a downward turning point in liquidity beyond expectations. In this context, it is not ruled out that the US stock market will repeat a similar style of "big cut small, high cut low" rotation market from mid July to the end of October last year, which will temporarily suppress the valuation of US stocks and drag down their overall performance. But with the start of a new round of monetary easing cycle and the spread of performance recovery, we are relatively optimistic about the performance of the US stock market after this point. We suggest paying attention to three main lines: 1) industries with abundant cash flow such as information technology, optional consumption, and healthcare; 2) Energy, utilities, and real estate industries with relatively reasonable valuations; 3) Benefiting from the upward cycle of investment in construction, construction machinery, and power enterprises. Finally, in the sustained high interest rate environment, we also need to be vigilant about the drag of weak employment and consumption on the demand for the real economy in the second half of the year, as well as the potential risks of refinancing commercial real estate loans or impacting the US financial system.