In 2023, the US stock market witnessed a strong revival. As inflation diminished from its 40-year highs and the Federal Reserve (Fed) embraced a more cautious stance on interest rate hikes, investor confidence in risk assets, especially stocks, saw a renewed upswing.
The primary catalyst for this upswing was the ‘Magnificent Seven,’ a cluster of seven leading Big Tech companies flourishing amid the ongoing artificial intelligence (AI) boom.
Contributing to the favorable sentiment, the Federal Reserve has recently affirmed its intention to implement rate cuts in 2024, instilling additional confidence in the market.
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In 2023, investors who placed their bets on the Nasdaq Composite reaped significant rewards, with the index showing an impressive year-to-date increase of over 44%. Despite a notable correction from July to October, the year concluded with a robust rally, pushing the Relative Strength Index (RSI) into the overbought territory.
At the time of writing, the index was trading at 15,011, representing a decrease of -0.56% from its previous close on December 29. This threshold is still in the red from an all-time high of 16,057.
At the start of this year, we delve into the latest market forecasts to explore what Wall Street anticipates for the US stock market in 2024.
Analyst predictions for NASDAQ in 2024
As we head into 2024, the trajectory of the stock market seems poised for an intriguing turn, especially for the Nasdaq Composite. The Federal Reserve’s anticipated rate cuts, potentially starting as early as March, are expected to be a significant catalyst. Lower interest rates typically boost liquidity, favoring equity markets, and could pave the way for notable index growth.
In line with this, experts like Dan Ives, a veteran Wall Street tech analyst, suggest that in a bullish scenario, we might see the Nasdaq Composite soaring towards the 20,000-point mark, a substantial rise from its current standing.
The resilience of the Nasdaq Composite in 2023, showing limited correlation with fluctuating interest rates and maintaining stability despite rising treasury yields until October, hints at an underlying strength. This trend could continue, especially if the market responds positively to the Fed’s policy adjustments.
2024 also brings into focus the dynamics of U.S.-China relations, especially their impact on tech giants like Nvidia (NASDAQ: NVDA). While increased U.S. pressure on China might seem daunting, the strong demand for advanced chips could mitigate short-term risks for American companies.
However, challenges persist, particularly with the Nasdaq’s dependence on mega-cap stocks like Microsoft (NASDAQ: MSFT). These stocks require substantial investment to drive upward movement. This is where insights from groups like Wedbush come into play, predicting a 25% rise in tech stocks for 2024, and aligning with a bullish outlook for the Nasdaq, potentially reaching the 20,000-point milestone.
Investor optimism is further buoyed by the prospect of falling yields, offering more affordable investment options in high-performing tech stocks. This financial environment encourages fund managers to invest in mega-cap stocks, not only to match but potentially outperform the index, creating a positive feedback loop and setting the stage for strong market trends.
Adding to this sentiment, CFRA Research’s chief investment strategist, Sam Stovall, foresees 2024 as a surprisingly good year for the Nasdaq, highlighted by an improvement in the average price change by 200 basis points. This perspective underscores the potential for significant growth, despite the looming 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.
