Inflation rates are cooling, which has led to an increase in optimism for rate cuts and a rise in stock market performance in November.
Goldman Sachs has projected an 8% climb for the S&P 500 in 2024, attributing this to pre-2008 conditions returning.
The general consensus is that the Federal Reserve is nearing the end of its rate-hiking cycle, and as a result, the stock market has been experiencing gains due to expectations of looser monetary policy.
In 2023, major indexes have seen an increase, with the S&P 500 showing a year-to-date gain of over 17%.
Goldman Sachs anticipates an 8% climb for the S&P 500 next year, noting a return to pre-2008 conditions with the economy and markets moving away from a decade of low inflation and near-zero interest rates.
David Russell, global head of market strategy at TradeStation, agreed with the pre-2008 view, drawing comparisons to the historic bull market in 1995.
He stated that inflation had cooled, and the Fed had stopped raising rates, much like the current situation. The moment, he said, bore striking similarities to the events leading up to the historic bull market in the 1990s.
The days of ultra-low rates are gone, with higher-for-longer becoming the new mantra. The Fed is expected to maintain restrictive policies until a significant economic slowdown occurs.
Steve Wyett, chief investment strategist at BOK Financial, highlighted that the increased cost of capital will separate well-managed companies from the rest, and any mistakes in allocating capital will be amplified.
BOK Financial remains cautiously optimistic about equities in the year ahead. While Mark Hackett, chief of investment research at Nationwide, pointed out warning signs such as credit card transactions, commercial loan growth, and an inverted yield curve, equity markets seem to have priced in the negative news already.
There are risks of a recession, geopolitical turmoil, and a US debt crisis, but strategists speaking with Business Insider remain largely positive about stocks for the coming year.
Gene Goldman, chief investment officer at Cetera Investment Management, expects a 10% gain for the S&P 500 in 2024. Additionally, Brian Price, head of investment management at Commonwealth Financial Network, foresees “mid-single digit returns” for the S&P 500, while Jeff Buchbinder, chief equity strategist for LPL Financial, expects “high single-digit returns” in 2024.
Despite expectations of market volatility, long-term investors are being encouraged to look for opportunities in the coming year.
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