There's something to be said about ending with a bang. The S&P 500 finished 2023 with a big gain, and much of it was generated in the last 10 weeks of the year.
Even better, though, is starting the new year with a bigger bang. How will the stock market perform in 2024? Here's what Wall Street thinks.
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A lot of bulls on Wall Street
The bulls appear to be dominant on Wall Street with the new year at hand. Most analysts are at least somewhat optimistic about how the stock market will fare in 2024.
Bank of America, RBC, and Federated Hermes analysts set S&P 500 price targets of 5,000 for the end of the new year. Admittedly, these companies are only moderately bullish with their projections of an upside potential of a little under 5%.
Goldman Sachs, Deutsche Bank, and BMO are more upbeat. Analysts at all three companies set S&P 500 price targets for 2024 of 5,100, reflecting an increase of nearly 7% from the index's current level.
Oppenheimer's chief investment strategist John Stoltzfus looks for a solid new bull market for the S&P 500. His price target of 5,200 represents a potential gain of almost 9%.
All of these bullish analysts think that moderating inflation and interest-rate cuts will be a key factor in boosting stocks in 2024. However, the biggest optimist in the group, Stolzfus, doesn't expect the Federal Reserve to cut rates until later in the year.
Not all analysts are so optimistic
There are several less optimistic analysts on Wall Street, though. JPMorgan Chase's Marko Kolanovic and Dubravko Lakos-Bujas are notably bearish about the stock market's prospects in 2024.
Kolanovic and Lakos-Bujas wrote to clients: "We expect a more challenging macro backdrop for stocks next year with softening consumer trends at a time when investor positioning and sentiment have mostly reversed." Their S&P 500 price target of 4,200 is 12% below the index's current level.
Morgan Stanley's S&P 500 price target of 4,500 projects a more modest decline of less than 6%. However, the company still expects average earnings growth among the S&P 500 companies of 7% or more in the new year.
Stifel strategist Barry Bannister doesn't think the S&P 500 will do much at all in 2024 -- and beyond. He wrote to clients, "We expect a range-bound S&P 500 in real terms to continue into the early 2030s." His S&P 500 price target for next year is 4,650, reflecting a decline of close to 3% from the index's current level.
Bannister does think there could be opportunities for investors, though. He believes that the market dynamics could make value stocks, small-cap stocks, and international stocks more attractive.
Which view is the right one?
We'll have to wait a year to find out which of these views turns out to be the most accurate. However, history appears to be on the side of the bulls.
The S&P 500 tends to move higher during U.S. presidential election years. There have been only two exceptions in the last six decades -- one at the beginning of the dot-com bubble bursting in 2000, and another with the financial crisis in 2008.
Whatever the S&P 500 does in 2024, though, investing in the index via exchange-traded funds (ETFs) and mutual funds will almost certainly be a winning strategy over the long term. The longer your investing horizon, the bigger the bang you'll likely enjoy.
