Forecasts for the 2024 for the Stock Market
Smart investors are beginning to look ahead to the 2024 market forecast to gauge the merits of investing in 2023. It’s when to buy the dip.
Forecasts are up and down depending on FED and political decisions, and with the global economy as well. Here we look at the negative and the positive and you can decide which prediction is more likely.
With respect to macroeconomic factors, estimates of GDP growth for the developed nations is for a low 1.3% and a measly 0.9% in 2024. Experts believe persistent tight monetary policy will dampen demand. The low GDP expectations stem from continued FED balance sheet tightening, which they could reverse, and from elevated interest rates which should fall.
So we begin with that bleak projection for next year, which suggests governments won’t drop interest rates in the face of defaults, banks can’t lend, and continued economic pain for most businesses. That would be very unpopular politically and the Dems are skating on thin ice.
The slumping popularity of Joe Biden and the Democrats likely means they will begin giving in to economic growth as the November 2024 election nears. It looks like inflation will decline through to end of 2023 and early 2024. The bell curve clearly shows we’re out of the danger zone with inflation even if it will take the rest of the year to cool off completely.
By increasing supply to markets with slumped demand, prices should fall. If rates are lowered, the 2024 economy will rush back. My guess is that Biden will ease up on the inflation fighting talk and avoid stagflation which the FED is apparently obsessed with.
Full Market Outlook: This post combined with the stock market forecast, 3 month forecast, 6 month outlook, and 5 year projections helps you generate a wide and deep view of the investing marketplace going forward. Ensure you make your investing decisions from every important perspective and avoid the corporate/political hype.
A More Positive Outlook is the Likelier One in 2024
Bank of America recently commented on a potential scenario for the 2024 year, although it should be noted their forecast last year called for a 24% drop this year, which didn’t materialize.
It might tell us that forecasting and predicting are no easy task even for those with all the data in front of them, and even for something like ChatGPT. Never theless, BofA believes 2024 will be a good year for investors. They attribute the positive projection to:
- 2023 will remove excess capacity resulting in leaner cost structure and improved margin profiles
- strong corporate earnings which will outpace the economy
- trillions of cash sitting on the sidelines waiting for good, reliable investments to appear
- US credit situation should improve or at least not deteriorate
- first quarter 2023 earnings of S&P 500 companies have been positive beating estimates
- credit conditions may hold steady if private equity and venture capital firms deploy their $2.2 trillion cash pile
- capital/private equity firms still sits at record levels
Additionally, BofA’s technical research strategist Stephen Suttmeier cited 2 bullish signals (market breadth and technical signals from 73 country indices) that could push the S&P 500 to 4,900 by March 2024 (up 19% from current levels).
In a Business Insider post, Suttmeier said “This 2023 trend for the S&P 500 is like other ‘wall of worry’ bullish turns in 2020, 2019, 2016 and 2012.” So based on past trends, he suggests a similar event will occur in 2024.
That outlook seems fairly realistic. What might be added to the mix is that the US government will have to reign back spending due to debt ceiling crises. The Biden regime will have to stimulate the economy via measures they don’t like — deregulation and lower taxes.
Consumer confidence is one the wane this year, and high interest rate policies are beginning to erode growth, spending, employment, and investment. Instead, the choice to let the economy produce more is the better path to take.
As this graphic from Statista shows, the forecast is more positive, for roughly $1 trillion in GDP growth each year to 2025.
LongForecast and Trading Economics on the 2024 Stock Market
Trading Economics is penciling in a decline of the S&P by 350 points by Q1 2024, and Dow Jones falling by almost 2800 points, and the NASDAQ falling by about 1100 points. Clearly the view is a declining performance until deeper into 2024.
Long forecast sees the Dow Jones dropping 17% by the end of 2024, the NASDAQ down by 12% and the S&P 500 down by 10.9%. Clearly, they see the FED sticking to high rates and balance sheet stasis.
In the final analysis, there is a lot of cash sitting in bank accounts and money markets. When rates fall, investors will want to move that cash to equities to catch the bull train leaving the station (FOMO). They’re waiting for the Fed’s tightening and high rates to ease as a key signal to start buying stocks. That money movement will affect the S&P forecast for 2024, NASDAQ forecast for 2024, and Dow Jones forecast for 2024.
Once inflation is crunched, experts believe the Fed must ease off rates soon to avoid a hard landing and recession. Politically, it’s not a good time for a recession and Americans anticipated something better after the pandemic.
If the Dems don’t call off the recessionary dogs, Biden will lose the 2024 election by a wide margin.
Overall, after a low performance for Q3, Q4 and Q1 of 2024, the S&P, Dow Jones and NASDAQ should recover well. 2023 is a buy the dip opportunity and investors will be looking for the market bottom and the best stocks with the most growth potential.
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