Stock Market Forecast 2024 and Beyond

Should you ignore the old wisdom of buy low, sell high? The fact is, there are a lot of bargains and we may have actually passed the low point and 2024 could be the beginning of something beautiful for investors. Stocks respond long before before a recovery, so you’ll need to pick your horses soon.

Perhaps the key to the recovery is prohibiting excess spending by the Democrats (debt ceiling talks) and insufficient catalysts for a boom. That controls inflation leading to lower interest rates leading to business credit access. Last week, stock prices rose even amidst the negative debt ceiling conflict, so there must be optimism in the investor world.

 

The S&P is up 8.3% year to date, while the NASDAQ is up a whopping 24.6%.  It’s a good sign for investors as we head toward a slow reversal of the Fed rate into 2024. Starting Wednesday, we caught a hint of the underlying enthusiasm of investors. That will surface again unless the FED drags the inflation fight out too long. China isn’t so much the enemy as much as the FED.

Last Weeks Stock Price performance.
Last Week’s Stock Price Performance. Screenshot courtesy of Google Finance.

With good earnings reports, the 3 month and 6 month outlook suggest it’s a good time for smart investors to buy low while less smart investors seek to leave equities giving up their chance at a fortune.  Investors should focus on the 1 to 5 year period in order to enjoy significant gains. The next billionaires will happen via the oil markets.

The oil sector is perhaps offers the biggest potential although tech deserves a mention. Definitely review oil stocks to buy during 2023, for ridiculous profit within two years. When the recovery happens, demand for oil will soar.

Markets have suffered low volume and disinterest for sometime, yet $5.3 Trillion in money markets is one reason to hang in there with your best picks. High interest rates are the misery and the coming reversal will take the wind out of the bond market to stimulate the business sector and draw funds into equities.  That makes the forecast for oil stocks so compelling. Easier credit by 2025 will be a particular relief for small enterprises.

Next year is an election year, and Biden can’t win with the brakes on.

Year to date performance of the major stocks indexes.
Year to date performance of the major stocks indexes. Screenshot courtesy of Google Finance.

See more on the 2024 outlook, as well as the 5 year and 10 year forecast for a comprehensive view before making investing decisions.

Year to date, NASDAQ and the S&P have persevered well. As interest rates ease, the NASDAQ is positioned best for growth, which means US tech stocks might be the best bargains. Here are your top performing tech stocks of late on the NASDAQ exchange. With the coming growth of AI, Nvidia has caught the eye of investors.

Here are your high flyers from the last month. As you can see, some smart investors picked the right stocks and made a fortune.

Top Sectors from TradingView

Top Performing S&P Sectors this week.
Top Performing S&P Sectors this week. Screenshot courtesy of TradingView.

According a report from Refinitiv, 77% of earnings reports are beating analysts’ earnings expectations. Q1 earnings results were revised upward. Where’s the case for pessimism?  Also, companies reported their earnings were 7.2% above expectations, the highest “surprise rate” since the Q3 of 2021. Refinitiv further forecasts 9.9% and 9.6% growth for Q4 2023, and Q1 2024 respectively.

If not for the debt ceiling limit battle, spending budget battle, and rumors of bank troubles, we’d likely be seeing another bull run. As Morgan Stanley pointed out in their Stock Market Outlook 2023 report, the stock market does very well in non-election years (+71%), and not badly in Presidential election years (40)%).

The pending emergency at the Southern border is likely to cause many investors to hold off until all the dust from these events. That should control any euphoric tendencies from those who realize overall, things are looking good in the markets. Wall Street is cautious right now.

 

Wall Street Waiting, But Should You?

Ed Moya, senior market analyst at Oanda cites issues exactly with his statement on CNBC that “Wall Street is hesitant to take on any major positions until we find out the outcome to both debt ceiling talks at the White House and on whether or not inflation is proving to be very sticky.” Kevin McCarthy made an offer to the Democrats today. The idea of any negotiation on the matter is causing fear in the markets.

Moya continues, “No one is doubting that bank stress won’t be going away as lending conditions continue to tighten, reserve requirements will go up, which will lead to less loans and a weaker economy.

As the chart from Yahoo Finance shows, the S&P is up an unpredicted 20% YTD, while the NASDAQ is up a strong 16.4%. The Russell 2000 was flying too until early March. Markets rose slightly today, May 11th with Google announcing plans to compete with OpenAI.

The US jobs report for April was positive: Total nonfarm payroll employment rose by 253,000 in April, and the unemployment rate changed little at 3.4%. The labor force participation rate, at 62.6%, and the employment-population ratio, at 60.4% remained steady last month. These stats are still lower than pre-pandemic era years, so there is room for growth and slack to keep wage demands down. Over the past 12 months, average hourly earnings have increased by 4.4% and remained the same in April.

Despite the bright monthly, 3 month and 6 month outlooks, some economists believe the high interest rates will finally hit economy hard in early 2024, and some believe it will start soon. A cut back in government spending could cause the cool down and with rates high, a recession is plausible.

Key Market Signals to Watch For

Regional banks stocks: they’ve seen their stock prices fall strongly last week. The FED noted in its Loan Officer Survey that “Banks reported tighter standards and weaker demand for all commercial real estate loan categories.” Higher interest rates combine with tighter lending standards threaten to slow the economy which relies on credit.

Debt Ceiling Limit: President Biden is blind to negotiation and resistance and blindly believes the Republicans will just roll over for his $7 Trillion spend package. The credit raters don’t like the debt limit rise and that the Democrats want to keep spending at an out of control pace. Biden is said to favor enacting the 14th Amendment to do as his party pleases with no input or negotiation.  Stock Investors are looking at signs of a real standoff and government shutdown. Most likely, they’ll just kick this can down the road.

New Inflation Data: New inflation data released today from the Bureau of Labor Statistics showed the (CPI) revealed headline inflation rose only 0.4% over last month and is up 4.9% year over year. Prices in March rose 0.1% vs February.

FED Pivot Timing:  The recent .25 rate hike should make some producers think twice about raising prices. Inflation is driven by monopolies, supply shortages, too much liquidity and demand, and the economic recovery.   The Central bankers says further hikes are unlikely beyond this most recent .25 final hike. The producer price index is due on Thursday. As this inflation rate chart from Investing.com shows, it will drop below 5% since 2021. The bell curve indicates the inflation bulge is behind us, unless the Biden regime prints more Trillions. The lower Fed rate is what makes 2024 look good.

US Inflation History Chart.
US Inflation History Chart. Screenshot courtesy of Investing.com

Rising Oil Prices: Biden has been releasing a lot of SPR oil which has sunk oil prices. Rumors now are that the reserve needs to be filled again, and that of course would jump the oil back up again. It’s likely Biden won’t buy back oil as the price climbs, but rather release more until the Nov 23 election. Higher oil prices might increase inflation and keep interest rates where they are.

Weak Dollar: a weak US dollar is good for US manufacturers and exporters. The dollar has sunk this year, and with the debt ceiling problem unresolved and global economic stagnation, demand for the US greenback should remain weak. It’s good for US stocks.

Based on these key market direction factors, the outlook is quite positive. Still some analysts believe that a hard landing is likely by 2024.

$5.3 Trillion Cash in Waiting When the Market Gives the Green Light

Investors still hoard a lot of cash, at record levels, and are still waiting for the stock market to really turnaround. During the past year, US investors holding cash were hit badly and few FX experts are calling for a resurgence in the greenback.  A strong persistent bull run should draw them back setting up a strong upswing in all indexes.

Money market funds are still swelled at $5.3 Trillion with inflows infusing another $599 Billion into the sector, according to a Bank of American report. However, the last time we saw huge inflows like that was back in 2008 after the Lehman Brothers collapse.

There’s issues to settle but with inflation expected to keep easing and the FED perhaps ready to pivot later in the year, investors are fairly optimistic. The economy is resilient and this summer’s spending season could keep the job markets strong and consumers a little easier about money.

Yet the The AAII Investor Sentiment Survey shows bearish sentiment among investors for the economy, but not as strong negativity about the stock market.

Market Forecasts for the Remainder of 2023

Morgan Stanley’s Mike Wilson was predicting double-digit percentage drops for stocks in early 2023. Other market prognosticators are called for recession in Q2 or Q3 of 2023. Yet another mini bear rally has some thinking it’s smooth sailing ahead.

Finding good stocks or other worthy investments will require thorough research and getting feedback from investment advisors and stock investing web sites. Stock market forecasts are critically important to investors who need to establish their own views to ensure their advisors aren’t moving their assets into danger.

While advice from top market investment advisors is essential, the full risk is born by. Have you wondered whether a ChatGPT stock market forecast will become a key part of investor strategy and stock buy decisions?

Reviewing guidance from investment companies and many insightful opinions is wise, and hopefully they’ll provide data and reasoning to back up their predictions, projections and outlooks.

Which Sectors and Stocks to Buy in 2023?

The performance of sectors and stocks in the last 3 months is a good guide to what you should invest in for the rest of the downturn. Those (defensive stocks) with good balance sheets in the best sectors in 2023 might be the safest investment.

Develop a stock portfolio you can be expert in, especially those sectors that are about to be the best beyond the next months to what is strong for the 5 year market outlook. The best stocks in the Dow Jones are lagging in May 2023 (sell in May?)

Dow Jones DJI Projections

Currently, for year to date, the Dow Jones is underperforming and Dow Jones stocks are barely up for the year. The economic slowdown, with the rapid rise in credit costs, has stunted manufacturing.

This chart from Barchart (one of the best investing websites to subscribe to) shows few Dow Stocks are thriving. However, this provides investors with a great buy the dip opportunity. Investors should review oil stocks since the price of oil is suppressed. Commodities and energy industry experts believe oil prices will rise — either through OPEC cuts or the depletion of the Special Oil Reserve. It’s important to look ahead at what will happen in November of 2023.  Joe Biden’s failing approval is a signal of big change to come.

Best Dow Jones Stocks.
Best Dow Jones Stocks. Screenshot courtesy of Barchart.com

Wild Swings in Forecasts from Some

A fund manager, Eric Johnson of Efficiency Market Advisors, last year, suddenly turned bullish for the 3 month outlook. Earlier, his stock investment advisory firm were just calling for a continued bear market. He says: inflation is falling sharply, the VIX is down, oversold indicators are up, rents are falling and home prices are falling, and the FED will stop hiking on December 14th, in an interview on CNBC.

Eric Johnson believes this pattern, V bottoms, has happened before and investors will jump on news the Fed is done. That suggests we haven’t seen the bottom of this market. The jump he’s referring to is still coming.

The S&P, Dow Jones and NASDAQ are exhibiting some volatility of late. See more on the Dow Jones forecast, S&P forecast, NASDAQ forecast, Russell small cap forecast, as well as the TSX forecast. The SPY ETF, best Dow Jones stocks, and 5 Year Stock Market Prediction are interesting reads. Learn all you can about the macroeconomic drivers before you buy the market bottom.

Update: S&P Market Sectors May 2023

The importance of watching and understanding what drives the various S&P sectors can’t be understated in your investment planning.

Energy, industrial, and materials are all lagging, and thus presenting good buying opportunities. Buy low, sell high. If you’re patient for the one year, three year and 5 year term, you should be richly rewarded for focusing on Dow Stocks and these sectors. Review each sector as presented in this chart another great investment strategy website TradingView. Tech and consumer stocks are doing well, but are they overpriced now? Don’t forget to explore ETFs.

S&P Sectors. May 2023.
S&P Sectors. May 2023. Screenshot courtesy of Trading View.

Oil prices have reclined given a warm winter, demand destruction, and Biden’s big releases from the US SPDR.

Persistent Inflation and the Fed’s Certain Response

The Fed’s goal is to lower employment and for that to happen, unemployment must grow, profits must drop and consumer and business spending must stop. Experts say the Fed is focused on unemployment numbers, yet latest report of 577,000 new jobs has to hit the FED hard. What level of rates would be needed to crush the spirit of American’s and the multinationals? They are laying off, only to rehire at lower wages.

What To Take Into Account for the Stock Market Forecast?

The next 3 to 6 months look scary driven by these factors:

  • rising Fed rates — likely more hikes of 25 basis points, moving up to 5% peak by summer
  • levelling unemployment and rising job claims (although good right now)
  • wages still strong but turning downward in 2023
  • housing market failing
  • persistent medium inflation
  • much lower US GDP for 1st quarter and 2nd quarter 2023
  • import prices rising
  • the U.S. manufacturing sector contracted in April, at 47.1%, 0.8% higher the reading reading in March. — the 6th straight month of contractions.
  • BEA gives negative forecast for corporate earnings going forward through 2024
    high US dollar is moderating

Is This the Bottom for the Stock Market?

Plenty of investing gurus are suggesting we’re in a buying opportunity, while some say we haven’t seen the bottom yet. The usual bears such as Michael Burry, Jeffery Gundlach, David Rosenburg gave gloomy outlooks, supported by the last Bank of America prediction as well.

Current Major Indexes (as of May 15, 2023)

S&P 500 : 4,135.00 ↓
Dow Jones 33,332 ↓
NASDAQ : 13,382.00 ↓
Russell 2000 : 1,744.00 ↓
WTI Crude Oil : $69.85 per barrel ↓
Gold : $2018.00 per ounce ↓
US Dollar : $102.68 ↑

What Do the Economists Say?

Ethan Harris, head of global economics research at Bank of America Corp. “We’re either going to have a weak economy or a recession.” — TBS News Report

Jamie Dimon of JP Morgan said there’s a 66% likelihood the U.S. is headed into a mild recession or something even worse.

We put the odds that the economy will suffer a downturn beginning in the next 12 months at one in three with uncomfortable near-even odds of a recession in the next 24 months,” said Moody’s Analytics chief economist Mark Zandi said last May. — Washington Post.

Are Investors Not Realizing the Bear Market Has Left?

Lael Brainard, usually a more dovish policymaker, said she expected “a combination of rate increases and a rapid balance sheet runoff to bring U.S. monetary policy to a more neutral position later this year. Further tightening would follow as needed” — from CNBC report.  However, that tightening might be officially done.

Forecasts for the S&P

This Week Yardeni of Yardeni Research released his S&P earnings predictions for 2023 and 2024.

His forecast is for Q2 is -5.1, Q3 is 3.5 and Q4 a strong 11.0. His earnings growth forecast for 2024 is again strong at 11.1% growth. This compares to Refinitiv Analyst data of -7.1 for Q2, .7% for Q3, and 9.5 for Q4. Their outlook for 2024 for the S&P is an even stronger 7.6% growth.

It looks like volatility is the state of the markets for at least another year.

Best Performing Stocks

Best performing stocks, YTD 2023.
Best performing stocks, YTD 2023. Screenshot courtesy of Barchart.

Forecasts 3 Months to 5 Years to 10 Years

Getting a clear view of the economy in the next 3 months to 10 year framework takes a little study. You can view more on the immediate market situation, the 3 month outlook, 6 month outlook, 5 year outlook and 10 year outlook. A smart investor will make themselves very aware of each forecast period.  The current market view will disappear and like a slide show, move to the next period.

The five year to ten year outlook is steadier and it’s important to consider that politically, the intent is to bring industrial production back to the US. That single factor should help view the future more optimistically. Interest rates, mortgage rates and lending to small businesses should all improve.

Stock Market Crash Possibilities

The general mood is that we’re in for a soft landing and the economy will not collapse. That pretty well negates a crash, although some experts are still playing it safe. It’s not risk off for top fund and investment managers.

Here’s 7 Factors to Watch as Signals of a Downturn

  • Inflation
  • Interest rates
  • Disappointing earnings
  • Geopolitical events
  • Banking crashes
  • Oil price shocks
  • Supply chain disruptions

Over the short term, with demand suppressed due to inflation fighting by the FED, there is nothing sudden on the radar.  We might be able to eliminate the idea of a stock market crash in 2023/24 and look for a level performance.  Yet, Ed Yardeni’s forecast is fairly positive.

There still is time to buy this dip and find the best stocks to buy. Check out the Dow Jone index, S&P 500, and NASDAQ posts for opportunities.  It turns out Bitcoin offered quite a return on investment, and Gold holds strong over $2000. But as the economy recovers, will they retain their value?  Meta was a washout, until it began disowning the MetaVerse fantasy project.  It has jumped nicely. Investors may have been able to see Zuckerberg finally admitting its failure and moving the company back to reality.

Although markets sprung back from the recent dip, there is plenty more volatility coming in the next 6 months.

5 Year Long Term Market Forecast is Optimistic

Few are talking boomtimes for the next 3 to 5 years. Many projections are for lacklustre market performance for the next decade as the US deals with a lack of competitiveness and a bleak dependence on China. Yet, the attitude toward the deficit in trade with China is becoming more firm.

American can’t continue with $800 billion trade deficits. Communist China and it’s leaders are not offering flexibility in trade, pushing the US into a competitive and protective mindset.  Protectionism will grow out of necessity as many nations suffer the debt spending of the pandemic. The US looks positioned to give support and ensure US money managers direct their investment money to the US.  New manufacturing plants will grow in the US because they have to by law.

It won’t be a trade war, but a negotiation of foreign involvement in the US and how to avoid trade sanctions and tariffs.

The 10 year stock market outlook is less certain of course, but consider that Millennials and Gen Z’s will slowly form more families and this is a massive number of people and a high spending phase of their lives. Additionally, millions of illegal immigrants flooding into the country in their 20’s to 40’s represents additional market demand.

As interest rates and mortgage rates fall, the business community can enjoy a return to profitability while banks resume normal lending for credit, business and buying homes.

See more forecasts on the real estate housing market, and the latest home prices and sales trends for numerous major metros in California including San Diego, Los Angeles, San Francisco, and Sacramento. See stats on other cities, including Denver, Dallas, New York, Boston, Atlanta and in the Florida housing market in Miami and Tampa. Visit Linkedin if you’re seeking advanced SEO and real estate marketing services for Fintech or Real estate firms.

Rising mortgage rates, inflation, reduced housing supply and high home prices threaten the markets, it appears 2002’s real estate scene will stay strong. Realtors may want to build their presence this year as house prices decline in 2023. Lower prices will bring plenty of homes onto the market and boost your opportunities.

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