As November concludes, inflation appears to be gradually cooling, sparking optimism for potential rate cuts, and fueling a stock market rally. Goldman Sachs made a bold projection of an 8% climb in the S&P 500 by 2024 as conditions comparable to those pre-2008 have been observed.
The market is of the opinion that the Federal Reserve has completed its cycle of rate hikes, which has contributed to ample gains for stocks, particularly the S&P 500, with a robust year-to-date increase of more than 17% in 2023.
According to Goldman Sachs, the return of pre-2008 conditions will pave the way for a surge in the S&P 500 next year. This shift from a decade of low inflation, near-zero interest rates, and negative real yields has been compared to the market prior to 1995 as the historic bull market took shape.
It is believed that the Fed will maintain a restrictive policy until there is a significant downturn in the economy. This will potentially put pressure on corporate margins and profitability in 2024, leading to mixed returns for investors.
Looking ahead, BOK Financial is exercising caution on equities for the year to come, despite expectations of the presidential election providing a modest boost. Meanwhile, risks of a recession, geopolitical turmoil, and a US debt crisis are looming concerns, but many strategists remain optimistic about stocks’ performance in 2024.
Gene Goldman from Cetera Investment Management expects a 10% rise for the S&P 500 in the upcoming year, while Brian Price from Commonwealth Financial Network predicts “mid-single digit returns.” Jeff Buchbinder, chief equity strategist for LPL Financial, also anticipates “high single-digit returns” in 2024. Amidst anticipated market volatility, long-term investors are advised to remain vigilant for opportunities.
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