Official Wall Street outlook: Here’s where strategists see the stock market going in 2024
Wall Street is out with its 2024 forecasts, but the consensus among strategists for next year is decidedly tepid after the fourth quarter’s exuberant 10% rally in the S & P 500. Market observers — who trotted out their predictions over the past several weeks — expect the S & P 500 will end next year at 4,881, according to the consensus target from the CNBC Strategist Survey released Monday. While that would represent a new all-time high for the benchmark, that’s only about 3% above Friday’s close of 4,719.19. (PRO subscribers can view the official 2024 strategist survey here . ) Stocks have already rallied in anticipation of easier policy from the Federal Reserve next year. The latest leg up occurred after the central bank last week left its benchmark rate steady, and signaled several rate cuts are on their way in 2024. That pushed the Dow Jones Industrial Average to a record, closing above the 37,000 level for the first time, and the S & P 500 is about 2% from a record. .SPX YTD mountain S & P 500 in 2023 Now, some investors are concerned that stocks have borrowed from the future, risen too high, too fast, and that the promised soft landing for the economy could face challenges in 2024. CFRA Research chief investment strategist Sam Stovall on Monday said the S & P 500 will likely reach new all-time highs after its recent rally, and then gain another 5%. But he expects it will pull back by 5% soon afterward. “The good news is that after the S & P 500 recovered all that was lost in the prior bear market, none of these subsequent declines became a new bear market,” Stovall wrote. “The bad news, however, is that this post-[all-time-high] advance might be very short-lived, since four times the market stumbled almost immediately after recovering its prior bear market loss,” he added. In fact, Goldman Sachs’ David Kostin already raised his 2024 forecast after the latest rally following the shift in tone from the Fed. On Friday, the strategist lifted his year-end target to 5,100 from his original forecast of 4,700 he first set in November. The new target represents an 8% advance from Friday’s close. “Lifting our 12-month S & P 500 target to 5100 as inflation falls, the Fed turns dovish, and real yields plunge,” Kostin wrote. Most bullish Even with the raise from Goldman, there are other more bullish forecasts on the Street. Oppenheimer Asset Management chief investment strategist John Stoltzfus said stocks can rally more than 10% to 5,200 next year. His thesis centers around earnings and revenue, which he expects will continue to grow during what he calls a “year of transition” for stocks as the Fed loosens up on interest rates. “Markets don’t move up in a straight line and setbacks are always likely, but those with patience and perseverance should see gains over the intermediate and long term,” Stoltzfus wrote last week. Other Wall Street firms with similarly bullish forecasts include Citigroup and BMO Capital Markets, which each have S & P 500 price targets of 5,100. Bank of America’s Savita Subramanian has a 5,000 price target, saying she expects a “stock picker’s paradise.” The bears On the other hand, stocks have quite a bit to fall next year if JPMorgan’s Dubravko Lakos-Bujas forecast bears out. The chief global strategist, the most bearish of his peers, has a year-end target of 4,200 for the S & P 500, expecting lackluster earnings to weigh on equity prices. For investors, that would mean stocks end next year about 11% below last week’s close. “We expect a more challenging macro backdrop for stocks next year with softening consumer trends at a time when investor positioning and sentiment have mostly reversed,” Lakos-Bujas wrote. “Equities are now richly valued with volatility near the historical low, while geopolitical and political risks remain elevated.” The strategist recommended investors buy bond proxies, for example, overweight positions in quality stocks in the utilities sector. Morgan Stanley expects the S & P 500 will drop to 4,500. How they did in 2023 To be sure, forecasting where stocks will land 12 months from now is a risky endeavor. This time last year, many prognosticators were calling for a recession, failing to foresee an AI-powered rally in tech titans such as Nvidia and Microsoft. After all, Nvidia had just slumped 50% in 2022 while Microsoft had tumbled almost 30%. For example, in November 2022, BofA’s Subramanian — a relative bull on 2024 — expected the S & P 500 to fall to 4,000 this year, as did Goldman Sachs’ David Kostin, who titled his 2023 outlook “Paradise Lost.” Barclays’ Venu Krishna was even more bearish, anticipating the S & P 500 would fall to 3,725. One of the most bullish 2023 forecasts came from Oppenheimer’s John Stoltzfus, who predicted the S & P 500 would end this year at 4,400. CFRA’s long-time chief investment strategist Sam Stovall thought the S & P 500 would climb to 4,575 — a bullish view as the year began, but one that’s still coming up short as the year winds down. Entering the penultimate trading week of the year, the S & P 500 is almost 23% higher in 2023, while the Nasdaq Composite has advanced almost 42%. The Dow Industrials have scored a 12.5% gain.
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