The S&P 500 index is expected to rise to 5,200 by the end of 2024, according to strategists at Oppenheimer Asset Management, which would represent an increase of nearly 13% from current levels. Stocks for next year.
The strategists, led by John Stoltzfus, Oppenheimer's chief investment strategist and managing director, wrote, “We expect this to be a year of transition.”
The strategists said in a note to clients on Monday that their call is that the slowdown in economic growth evident in early numbers from the fourth quarter of 2023 will continue into 2024, further weakening the inflationary pressures that necessitated the Fed's tightening policy. He said he assumed that.
Stoltzfus and his team expect the Federal Reserve to move to cut rates by the second half of 2024, and no later than the fourth quarter of next year. Their view runs counter to market expectations that the first rate cut will occur in the first quarter.
“Expectations for a series of rate cuts in the first half of the year appear too rosy among some market participants, with interim rate cuts and even rate hike adjustments before the Fed finally introduces its current benchmark rate. “likely to be a 'hiking cycle,'” Stoltzfus and his team said.
“We still cannot rule out the possibility that the central bank will have to raise interest rates slightly at the beginning of the year unless inflation continues its downward trend,” he added.
On Monday, federal funds futures traders said there was a 98% chance the central bank would keep interest rates unchanged at 5.25% to 5.5% at this week's meeting and a 94% chance that no action would be taken by January. There is. However, the probability of a rate cut of at least 25 basis points by March is 38.4%, down from 57.4% a week ago. CME FedWatch Tools.
look: Fed tries to 'keep calm and continue operations' amid talk of deep interest rate cuts and economic recession
When it comes to stocks in particular, Stoltzfus and his team expect the cyclical sectors that drove the stock market rally in 2023, such as technology, communications services, and consumer sectors, to continue to perform well next year. , the rise also extended to other sectors, including small and medium-sized stocks.
However, given the economic and interest rate backdrop, Oppenheimer strategists expect company sales and earnings to continue to grow through 2024. They are predicting returns for the S&P 500 SPX.
With company stock prices reaching $240 per share, the large-cap index's price-to-earnings ratio is expected to widen to 21.7 times trailing 12-month earnings in 2024.
The S&P 500 index currently trades at a forward P/E ratio of more than 18 times, according to FactSet data.
Mr. Stoltzfus is one of Wall Street's most bullish strategists, accurately predicting stock market gains this year. He currently has the most optimistic outlook for 2024, along with stock bull Tom Lee of Fundstrat. Their S&P 500 price target for the end of next year is 6.1% higher than the average estimate of 4,902 among 14 sell-side strategists. MarketWatch investigated on Monday.
Following their forecast for a big rally in 2024, Ed Yardeni of Yardeni Research also offered a super bullish forecast, seeing the S&P 500 index reach 5,400 points next year and 6,000 points by 2025. .
The S&P 500 rose 0.1% to $4,609 early Monday afternoon, while the Dow Jones Industrial Average DJIA rose 0.2% to $36,322 and the Nasdaq Composite Index fell 0.1%, according to FactSet data. .