According to Bloomberg’s most recent Markets Live Pulse survey, the S&P 500 Index will reach a record high in 2024 as the United States escapes a recession. However, a weaker consumer will result in a 20% increase in the index, which is less than the surge of 20% observed this year.
The S&P 500 is anticipated by a median of 518 respondents to reach 4,808 points next year, surpassing its previous closing high of 4,797 points in January 2022. Additionally, the 10-year Treasury yield is anticipated to decline to 3.8% from its apex of 5% this year.
The majority of participants anticipate interest rate cuts by the Federal Reserve to commence prior to July, and over two-thirds of respondents do not consider a harsh economic landing to be the greatest risk to markets.
“Exceptionalism in the United States persists firmly in place,” said WisdomTree’s director of macroeconomic research, Aneeka Gupta. “A more favorable economic environment in comparison to China and Europe, improved earnings estimates, and lower valuations for the equal-weighted S&P 500 are the primary drivers.”
The favorable outlook stands in stark contrast to what investors anticipated entering this year, when concerns regarding an extremely hawkish Federal Reserve and the possibility of a US recession prompted them to anticipate volatile markets. However, contrary to negative predictions, the labor market continues to exhibit strength, and earnings in corporate America are recovering ahead of schedule.
Further reading: The Nearly Everything Wall Street Anticipates in 2023
Prominent Wall Street strategists, such as those at RBC Capital Markets and Deutsche Bank AG, forecast an all-time high for US equities the following year, citing the S&P 500’s adaptation to the higher interest rate environment.
Contrary to this, not every individual is optimistic. A strategist at Bank of America Corp., Michael Hartnett, stated that while a recent decline in yields had undoubtedly fuelled gains in equities, a further decline to near 3% next year would indicate an economy that is faltering and ultimately be a drag on stocks. In fact, approximately 33% of survey respondents anticipate that consumer fatigue will pose the greatest threat to the rally the following year.
