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• Most analysts on Wall Street expect 2024 to be a good year for equities.
• The most bullish analysts are from Yardeni Research, who see it rising to $5,400.
• Some analysts like JPMorgan and Cantor Fitzgerald are pessimistic.

The S&P 500 index (SPX) had a strong performance in 2023 as it surged by over 25% and pared back its 2022 losses. Its other peers like the Nasdaq 100 and Dow Jones also surged to record highs.

The main lesson from this is that American equities always rise. We saw these indices rebound after their March 2020 crash as the Covid-19 pandemic started. Additionally, they also jumped after the Global Financial Crisis (GFC) in 2009 and the dot com bubble in the early 2000s.

Therefore, I suspect that 2024 will be a good year for American equities. The economy has successfully avoided a hard landing as consumer spending held quite well. Also, the Federal Reserve is expected to start cutting interest rates in March now that inflation is nearing its target of 2.0%.

I also see corporate earnings will do well since wage growth is growing quite well in the US. According to FactSet, analysts are now predicting a double-digit growth in 2024. They see them rising by 11.4% during the year, higher than the trailing ten-year average. The top-performing sectors will be health care, communications, and technology,

My base case is a situation where the SPX index jumps to $6,000 in 2024, implying another 25% increase from the current level.

This view is much more optimistic compared to that of Wall Street banks. The most optimistic analysts are from Yardeni Research, who expects the S&P 500 index to rise to $5,400. In an interview this week, Ed Yardeni said that the American economy will continue being resilient during the year. He sees China’s slowdown as the biggest risk.

The other aggressive estimates are from Oppenheimer, Goldman Sachs, BMO, Citigroup, and Deutsche Bank. These analysts believe that the S&P 500 index will surge to $5,000 in 2024 as investors cheer the start of rate cuts. 

Not all Wall Street firms are optimistic about the SPX index. Those at Cantor Fitzgerald, JPMorgan, Scotiabank, and Wells Fargo believe that the index will end lower than where it is today. Morgan Stanley sees stocks remaining in a consolidation phase in 2024.

There are several risks to have in mind as we start a new year. The biggest risk is a full-blown war in the Middle East, where tensions are continually rising. Yemen terrorists have pledged to continue causing havoc in the region. There is also risk about the Magnificent 7 in 2024. Some analysts believe that these companies are highly overvalued after surging in 2022. The other risk is the upcoming American election, especially if an indicted Trump is the Republican nominee.

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