2024 stock market forecasts are in. Bullish or bearish?

This time last year, analysts were gloomy on what was in store for the stock market in 2023, especially given issues such as the war in Ukraine, the prospect of higher interest rates, and expectations of a recession. So far, those dour predictions have been proven wrong, with the S&P 500 up more than 19% as of Monday, driven by strong outperformance among megacaps like Apple (AAPL), Microsoft (MSFT), Amazon (AMZN) and Nvdia (NVDA).

So what’s in store for 2024?

Some analysts are offering bullish predictions, with Deutsche Bank and BMO strategists predicting a potential 13% rise in the S&P500 (^GSPC). Yahoo Finance‚Äôs Market Reporter Jared Blikre weighs in on analysts’ predictions and takes a closer look at some of the areas of the market that surprised to the upside, and what might be in store for next year.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript

DIANE KING HALL: 2024 is getting a lot of bullish stock market forecasts from strategists– or I should say more. But based on past calls, how seriously can we take these opinions? Our very own Jared Blikre is here to break down strategists’ sentiment.

JARED BLIKRE: Yeah, not to pour cold water over, well, all the talk about 2024 that we’re talking about. But let’s dial back one year ago. And this is a chart going all the way back to 2000 when analysts thought, strategists thought the S&P 500 was going to return in the following year.

And guess what, right down here one year ago, analysts thought that this was going to be a negative year, a negative year of returns for the S&P 500. Of course, that hasn’t happened. But it’s interesting to note this but also important to realize that a lot of time analysts are just extrapolating in a linear fashion from whatever is happening at the time.

So at the end of last year, investors were shell shocked from the historic rise in interest rates, the most blistering pace that we’ve seen in 40 years. And this saw considerable hits in the stock market. But I want to get to the present here. This is what analysts are so far expecting for 2024, an average price target of $4,610 in the S&P 500.

Well, the current price is only $4,500. And this is only an average. But we were just talking about the estimated. EPS of $230. Let me show you some of the more bullish calls here. Deutsche Bank, BMO expecting $5,100. But still that would only be a 13% rise from where the S&P 500 currently is.

So back to my main point, analysts tend to extrapolate into the future whatever is happening right now. And what’s happening right now is we are seeing incredible outperformance from the mega-caps. This hasn’t just been a first half of the year story as it was. They have reignited. This is month to date. This is what’s happened in the month of November. Apple up over 10%. Microsoft up over 11, so is Amazon, NVIDIA up another 18%.

When you take a look at the year-to-date totals, $229 for NVIDIA, investors might be a little bit optimistic, too optimistic about the prospects for tech going into 2024. So enjoy the 2023 rally while it lasts.

As I’ve been saying, there’s a lot of catch-up to be done. And Wall Street analysts and portfolio managers are just clamoring to hold the right stuff at the end of the year. But heading into the new year, very likely to see different dynamics at play here.

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