After a challenging 2022, the stock market rebounded impressively in 2023, with the S&P 500 and Nasdaq 100 jumping over 20% and 50%, respectively. This surge was fueled by a resilient economy, easing inflation, and the prospect of peak interest rates, which eased fears of a looming recession and encouraged investors to re-engage with stocks.
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Now, the burning question is whether this robust market rally can persist into 2024 or if an economic slowdown and a potential market crash are on the horizon.
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We have compiled an exhaustive summary of Wall Street’s top predictions for the stock market in 2024, ranging from potential recessions to the continuation of the current bull market. Here’s a snapshot of what the financial experts anticipate:
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BCA Research (Bearish, S&P 500 Target: 3,300): BCA Research predicts a significant market downturn in 2024, potentially the worst since 2008, triggered by an anticipated recession in the US and euro area. They warn of a challenging risk/reward balance for stocks and foresee the S&P 500 dropping to between 3,300 and 3,700 before a possible rebound.
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JPMorgan (Bearish, S&P 500 Target: 4,200): Citing high equity valuations, rising interest rates, a weakening consumer base, escalating geopolitical risks, and a possible recession, JPMorgan expresses little optimism for stock market growth in 2024. They anticipate a challenging macro environment leading to a decline in equities from current levels.
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Morgan Stanley (Neutral, S&P 500 Target: 4,500): Expecting a relatively flat stock market in 2024, Morgan Stanley sees certain sectors outperforming others. They predict the dominance of mega-cap tech stocks to persist initially, followed by a potential breakdown. Morgan Stanley suggests a focus on defensive growth stocks in healthcare, utilities, and consumer staples, alongside late-cycle cyclical stocks in industrials and energy sectors.
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Stifel (Neutral, S&P 500 Target: 4,650): Stifel’s Barry Bannister expects the S&P 500 to peak at around 4,650 in the first half of 2024, suggesting minimal growth from current levels. He believes mega-cap growth stocks will underperform compared to cyclical value stocks in sectors like financials, energy, materials, and real estate. Bannister also predicts a range-bound S&P 500 in real terms into the early 2030s.
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Goldman Sachs (Neutral, S&P 500 Target: 4,700): Goldman Sachs foresees the S&P 500 ending 2024 slightly higher, stuck in a “fat and flat” range since 2022. They attribute this to sustained high interest rates hindering valuation expansion, expecting market forecasts to align closely with earnings growth. The bank highlights solid corporate earnings, which could support stock prices if a recession is avoided.
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NDR (Bullish, S&P 500 Target: 4,900): Ned Davis Research focuses on the Federal Reserve’s actions throughout 2024, predicting a 70% chance of a soft landing. They anticipate lower inflation leading to rate cuts and a dip in the 10-year Treasury towards 3.5%. NDR sees a continuation of the cyclical bull market, setting a year-end S&P 500 target of 4,900.
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Bank of America (Bullish, S&P 500 Target: 5,000): Bank of America’s bullish outlook for 2024 stems from the Federal Reserve’s progress in tightening monetary policy. They highlight companies adapting to higher rates and inflation, and the market’s focus on potential economic downturns.
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RBC (Bullish, S&P 500 Target: 5,000): RBC’s outlook for 2024 suggests further upside, driven by a continued decline in inflation rates. They note the potential impact of the presidential election on market uncertainty, yet also mention that the S&P 500 typically sees average gains of around 7.5% in election years.
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Federated Hermes (Bullish, S&P 500 Target: 5,000): Chief equity strategist Phil Orlando of Federated Hermes predicts a steady rise in stocks into 2024, driven by the expectation that the Federal Reserve will halt rate hikes as inflation cools.
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Deutsche Bank (Bullish, S&P 500 Target: 5,100): Deutsche Bank envisions a soft landing for the US economy, with solid GDP growth and cooling inflation, favorable for the stock market. They anticipate a 10% rise in the S&P 500 to 5,100 in 2024, with potential for even greater gains if a recession is avoided.
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BMO (Bullish, S&P 500 Target: 5,100): BMO’s 2024 outlook predicts solid gains in the stock market, driven by falling inflation and interest rates, a strong job market, and rising corporate earnings. They expect US stock market performance to follow a path of normalcy in earnings growth and valuation trends.
