What awaits the stock market in 2024?

In November of last year, the global stock market experienced its best performance in three years, due to optimism surrounding a potential rate cut.

Billionaire Bill Ackman predicts that the Federal Reserve will reduce interest rates during the first quarter of 2024.

Analysts on Wall Street had differing predictions for the S&P 500 in the upcoming year.

Shares are expected to rise by Deutsche Bank, BMO Capital Markets, and Bank of America.

In contrast to their colleagues, Wells Fargo and JPMorgan are not as optimistic.

Analysts from Deutsche Bank, BMO Capital and Bank of America are forecasting that the S&P 500 index will reach a record high of 5,100 points in 2024, which is an increase of 12% from its current levels.

The belief that the Federal Reserve is close to attaining a "soft landing" for the economy is the basis of Wall Street's optimistic outlook. This would mean that inflation would decrease to its 2% goal without any significant decrease in economic growth or a sudden increase in unemployment.

The Deutsche Bank is sure that the market will be bolstered by a decrease in inflation and an increase in corporate profits. Analysts predict that the S&P 500's earnings per share will expand by 10% in the upcoming year, even if there is a slight economic downturn in the initial six months.

BMO Capital Markets believes that further stock market growth will be driven by slowing inflation, lower interest rates, a strong labor market, and increasing corporate earnings in the coming year.

If the US labor market remains stable, a recession could be avoided and the S&P 500 could reach 5,500. According to BMO, S&P 500 earnings per share could increase to $250 by 2024, a 13.6% increase.

Wells Fargo is not overly optimistic about the S&P 500's prospects for next year, setting a target of 4625 points (+1.6% from current levels). Despite the US economy slowing down, the bank believes it has not deteriorated enough to warrant the Federal Reserve beginning to reduce interest rates.

JPMorgan is cautioning that stocks are still exposed to the danger of high interest rates and the possibility of a recession. The optimists are incorrect in their belief that stocks will increase in 2024.

Billionaire investor Bill Ackman believes that the Federal Reserve should start reducing interest rates in the first quarter of the year, as he believes there is a high chance of a "hard landing" if the Fed does not start easing its policy soon.