Never Take Eyes Off the Market: 2024 Outlook
The signs of a soft landing in the US are starting to emerge, with falling inflation and the prospect of easier Fed policy making it more likely that the economy will avoid a recession. A number of leading indicators suggest that the economy is still growing, although some indicators are starting to show signs of […]
The signs of a soft landing in the US are starting to emerge, with falling inflation and the prospect of easier Fed policy making it more likely that the economy will avoid a recession. A number of leading indicators suggest that the economy is still growing, although some indicators are starting to show signs of a decline.
Equity markets tend to bottom well before the peak of economic distress, with the exception of the dot-com cycle. Although there’s a chance of a recession next year, it’s likely to be mild, as the Fed has been providing ample liquidity to the financial system.
The main challenge for investors is the damage that a soft landing will do to the public sector’s finances, as well as the concentration of megacap stocks in the market. In 2023, earnings for the S&P500 were flat, while those for the 7 biggest companies were up 33%.The Nasdaq composite and the Dow Jones Industrial Average were up 43.4% and 13.7%, respectively. All of this means that in 2024, the earnings growth for the S&P500 is expected to be single digits, and the returns for the stock market are expected to be modest.
| Company Name | Symbol | 2023 YTD Performance |
| Alphabet | (GOOGL) | +58.3% |
| Amazon | (AMZN) | +80.9% |
| Apple | (AAPL) | +48.2% |
| Meta Platforms | (META) | +194.1% |
| Microsoft | (MSFT) | +56.8% |
| Nvidia | (NVDA) | +238.9% |
| Tesla | (TSLA) | +101.7% |
If the outlook for the economy is improving, a diversified portfolio of high-quality corporate bonds, cash, and equities is a good idea. In addition, industrials and energy are expected to perform well, as US policies are expected to boost economic growth.
2024 S&P 500 Forecasts
| Wall Street Firm | Price Target | Performance % |
| Yardeni Research | 5,400 | 14.4% |
| Oppenheimer Asset Management | 5,200 | 10.2% |
| Fundstrat Global Advisors | 5,200 | 10.2% |
| Citi | 5,100 | 8.1% |
| Deutsche Bank | 5,100 | 8.1% |
| BMO Capital Markets | 5,100 | 8.1% |
| RBC Capital Markets | 5,100 | 8.1% |
| Goldman Sachs | 5,100 (up from 4,700) | 8.1% |
| Bank of America | 5,000 | 6.0% |
| Barclays | 4,800 | 1.7% |
| UBS Global Wealth Management | 4,700 | -0.4% |
| Wells Fargo Securities | 4,625 | -2.0% |
| Morgan Stanley | 4,500 | -4.6% |
| JPMorgan Chase | 4,200 | -11.0% |
