The US stock market experienced a robust resurgence in 2023. As inflation receded from its 40-year highs and the Federal Reserve adopted a more measured approach to interest rate hikes, investor confidence in risk assets, particularly stocks, increased once again.
However, the true driving force behind this rally was the so-called ‘Magnificent Seven,’ a group of seven prominent Big Tech companies thriving amid the ongoing artificial intelligence (AI) boom.
Adding to the positive sentiment, the Federal Reserve recently confirmed its plans to initiate rate cuts in 2024, injecting further optimism into the market.
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Consequently, the Dow Jones Industrial Average (DJIA) achieved a historic milestone by closing above the 37,000 level for the first time, while the S&P 500 came within a mere 2% of reaching a new all-time high.
At the time of writing on January 1, DJIA was sitting at 37,689, just below its all-time closing high of 37,710 reached on December 28.
In the wake of this bull run, we delve into the latest market forecasts to explore what Wall Street anticipates for the US stock market in the upcoming year, 2024.
Wall Street’s expectations
Looking ahead to 2024, much of the market’s anticipated trajectory is hinged on the macroeconomic landscape.
The Federal Reserve’s commitment to reducing interest rates three times in the coming year is a significant factor, although market participants speculate that more cuts might be in the offing.
Another crucial element in shaping the market’s fate is whether the Federal Reserve can orchestrate a ‘soft landing.’ This concept involves the central bank maintaining interest rates at a level that curbs economic growth and inflation without triggering a recession—a scenario that would be deemed a hard landing.
Despite these uncertainties, a prevailing sense of optimism permeates Wall Street. Key financial institutions, including Goldman Sachs, Oppenheimer, Citibank, BMO Capital Markets, and Bank of America, have already raised their 2024 forecasts for the US stock market. This collective optimism underscores a prevailing belief that the Federal Reserve’s actions will navigate the economy through potential headwinds.
Conversely, there are dissenting voices in the predictions for 2024.
Marko Kolanovic, JPMorgan’s chief market strategist and co-head of global research, stands among those forecasting a major pullback in US equities next year. Kolanovic cites factors such as decelerating global growth, declining household savings, and geopolitical tensions as potential catalysts for a market correction.
BCA Research analysts adopt an even more cautious stance, issuing a notably bearish outlook that suggests the equity market could experience one of its most severe crashes since 2008, pointing to looming recessionary risks.
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Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
