Strong 2023 Gains Could Carry Over to Boost Equities in 2024
The U.S. stock market’s significant gains in 2023 have the potential to provide a lift for equities next year, according to historical trends. The S&P 500 ended the year with an annual gain of over 24% and is close to reaching a new record closing high. Market strategists believe that strong annual performances often carry over into the following year due to factors like momentum and solid fundamentals. Data from LPL Research shows that years following a gain of 20% or more have seen the S&P 500 rise an average of 10%. These years also tend to be positive more frequently.
Momentum and Durable Trends Point Towards Continued Strength
Market experts suggest that momentum in the stock market tends to continue, especially after years with gains of at least 20%. Adam Turnquist, chief technical strategist at LPL Financial, believes that these trends are indicative of durable themes persisting beyond a calendar year. LPL Research has set a year-end target range for the S&P 500 in 2024 but sees potential upside above 5,000 if certain conditions are met, such as lower interest rates, double-digit earnings growth, and no recession in the U.S. economy.
Positive Signs from Historical Data and Record Highs
Historical data also supports the idea of a bullish year for stocks in 2024. There have been instances where stocks have seen strong gains after rebounding from steep drawdowns, indicating a continuation of upward momentum. Additionally, reaching a record high has often been followed by further gains in the S&P 500. These positive signs bode well for the stock market’s performance in the coming year.
Challenges and Factors to Watch Out For
While historical trends and indicators are encouraging, there are potential challenges that could impact the market’s strength. Economic wobbles or accelerating inflation could hinder momentum for stocks. The outcome of the Fed’s first monetary policy meeting of the year and the direction of interest rates will also be important factors to watch. It’s important to remember that while history can guide predictions, it’s not always an exact science.
Hot Take: Positive Outlook for Equities in 2024
Based on historical data, momentum, and various indicators, experts predict a positive year for equities in 2024. The strong gains in 2023 and the potential for continued upward momentum suggest that stocks could perform well in the coming year. Factors like solid fundamentals, durable trends, and previous market patterns support this optimistic outlook. However, it’s crucial to monitor potential challenges such as economic instability or inflation. Overall, the signs point to a bullish year for stocks in 2024.
By
By
By
By