Will stock market boom in 2024?
According to various sources, the market outlook for 2024 is mixed, as there are both opportunities and challenges for investors. Some of the factors that may affect the market performance are: - The economic recovery from the COVID-19 pandemic and the impact of new variants and vaccines.
The US stock market enjoyed a strong first quarter in 2024, advancing 10%. But inflation was stickier than some expected. In fact, the March CPI number that came out this morning was hotter than expected, too. And that's leading many to question when the Federal Reserve will begin cutting interest rates.
Nasdaq-100 Price Predictions for 2024 (AI-based)
The Nasdaq 100 price prediction from Long Forecast Agency is bullish, predicting that the index could open 2024 at 17,149 and trade above 20,000 points during 2024.
Returns in the S&P 500 over the coming decade are more likely to be in the 3%-6% range, as multiples and margins are unlikely to expand, leaving sales growth, buybacks, and dividends as the main drivers of appreciation.
There is also ample earnings growth in the pipeline: Wall Street analysts are forecasting 11% earnings growth this year for S&P 500 companies, after gains of just 2% in 2023. Next year, the consensus call is for a gain of 13%, hardly the stuff of which bear markets are made.
Wall Street analysts' consensus estimates predict 3.6% earnings growth and 3.5% revenue growth for S&P 500 companies in the first quarter. Analysts project full-year S&P 500 earnings growth of 11.0% in 2024, but analysts are more optimistic about some market sectors than others.
The S&P 500 still has 30% upside between now and the end of 2025, according to Capital Economics. "Our end-2025 forecast of 6,500 for the index is premised on its valuation reaching a similar level to its peak during the dot com mania," Capital Economics said.
| Year | Open, $ | Close, $ |
|---|---|---|
| December 2024 | 45370 | 46983 |
| December 2025 | 56472 | 59561 |
| January 2026 | 59561 | 56446 |
| December 2026 | 53164 | 51981 |
| Period | Average annualised return | Total return |
|---|---|---|
| Last year | 47.8% | 47.8% |
| Last 5 years | 22.5% | 176.2% |
| Last 10 years | 20.9% | 568.3% |
What is the best investment in 2024?
- High-yield savings accounts.
- Certificates of deposit (CDs)
- Bonds.
- Money market funds.
- Mutual funds.
- Index Funds.
- Exchange-traded funds.
- Stocks.
U.S. stock returns: 2023 optimism carries forward
This heightened optimism is on par with the positive outlook in December 2021, when investors anticipated a 6% stock market return for 2022. Investor expectations for stock returns over the long run (defined as the next 10 years) rose slightly to 7.2%.
The S&P 500 has risen sharply in recent months, partly fueled by the view the Fed could soon start cutting rates. The index has hit record highs this year, and is up about 4% so far for 2024 after rising 24% in 2023.
Key Takeaways:
The 100-minus-your-age long-term savings rule is designed to guard against investment risk in retirement. If you're 60, you should only have 40% of your retirement portfolio in stocks, with the rest in bonds, money market accounts and cash.
In the near term, investors should prepare for the market's recent volatility to persist. “Expect continued choppiness in the markets, and not necessarily a straight upward path for stocks in the coming months,” says Haworth. Yet he says investors may be better served by positioning their portfolios for the long-run.
Stock market crashes wipe out equity-investment values and are most harmful to those who rely on investment returns for retirement. Although the collapse of equity prices can occur over a day or a year, crashes are often followed by a recession or depression.
1. Positive returns -- but smaller than in 2023. I think that the overall stock market will deliver positive returns in 2024. However, I expect those returns to be somewhat smaller than they were last year.
Economic growth actually accelerated above its 10-year average in 2023. That resilience, coupled with a fascination about artificial intelligence (AI), changed investors' collective mood. The S&P 500 soared throughout the year and finally reached a new high in January 2024, making the new bull market official.
Stocks and bonds may both be poised for success in 2024. Easing inflation and a pivoting Fed should reduce headwinds that have faced both asset classes in recent years.
Traders work on the floor during morning trading at the New York Stock Exchange on March 6, 2024. Despite the heavy concentration of the U.S. market rally in expensive, AI-focused tech stocks, analysts say Wall Street is not yet in bubble territory.
Will stocks rebound in 2025?
The S&P 500 still has 30% upside between now and the end of 2025, according to Capital Economics. "Our end-2025 forecast of 6,500 for the index is premised on its valuation reaching a similar level to its peak during the dot com mania," Capital Economics said.
The shift up in portfolio returns reflects a 7.4% expected annualized return for U.S. stocks in the next 10 years, up from the 6.5% assumption made last year.
Expectations of an earnings rebound in 2024 suggest earnings could continue to drive the market higher. While some valuations are stretched, there is still room for the market to grow if earnings estimates are met.
To reach 50,000, the Dow wouldn't even need to double — it would require a 31.6% gain from the 38,000 level. If the DJIA companies only earned the current 1.77% dividend yield, it would take 15.6 years for the index to reach the 50,000 mark.
To some investors, this might seem unlikely. The Dow Jones Industrial Average, an index that has astonished with its ascent over the past decade, likely will continue to astonish through the 2020s, rising to 50,000 by 2027.
