US stocks will reach new highs in 2024, with an S&P rally in sight. Experts look optimistically at risk appetite thanks to a Fed turnaround next year.
Rally in sight for US stocks next year: according to a JP Morgan strategist, the S&P 500 is set to reach a new all-time high by mid-2024.
As 2023 nears the end with many uncertainties priced in by the markets, from higher Fed rates for longer, to war, to a possible recession, and high tensions with China, something could change in 2024.
To regain a feeling of confidence and optimism on Wall Street, however, something will need to change, especially in the monetary policy of the US central bank.
That’s what AJ Oden, global investment strategist at JP Morgan Wealth Management, believes. Here’s why the stock rally will occur in 2024, according to the expert.
Historical high for US stocks in 2024: the forecast
According to AJ Oden, the S&P 500 index is set to set a new record next year and everything will depend on the Fed. This would be a rally of at least 12% from today’s levels, up to exceeding the current all-time record of 4,796 as of January 2022.
This is largely due to the fact that JP Morgan expects the Fed to pivot to rate cuts soon, which is a bullish factor for stocks.
After central bankers raised interest rates aggressively over the past year to lower inflation, Fed officials now appear more optimistic about the economy, Oden noted.
Markets, meanwhile, have priced in a 44% chance that rates will be below the current level by June 2024, according to the CME’s FedWatch tool.
“This is the base case of a soft landing”, the JP Morgan analyst added later referring to his stock market forecasts. “At some point the Fed will change direction and the market will recover from there”.
A rally resulting from future rate cuts will also be aided by strong U.S. consumers, Oden said. While financial conditions have tightened significantly over the past year, consumer spending has remained strong, and he estimates that 88% of consumer discretionary stocks in the S&P 500 are “poised to perform reasonably well.”
The forecast comes as a surprise, as it counters more bearish stock market estimates that a recession is imminent as inflation could rise and the Fed is seen keeping interest rates tight.
Investors have been on edge since Jerome Powell warned that interest rates could stay higher for a longer period during the Fed’s September policy meeting, which triggered a stock sell-off as investors’ Bond yields rose.
Original article published on Money.it Italy 2023-09-27 15:27:28. Original title: Azioni Usa verso il rally nel 2024, ecco perché
