"Implicit in model is the idea that continued moderation in inflation can do most of the heavy lifting to prop up the P/E multiple, something our analysis suggests happened back in the 1970's," RBC said. The main driver behind the expected gains next year could be a continued decline in the inflation rate. The stock market's strong 9% rally in November may have pulled forward some of 2024's potential gains, but there's still further upside ahead, according to RBC's 2024 outlook. Roberto Machado Noa/LightRocket via Getty Images Nevertheless, the lack of strong profit growth and a high starting valuation (particularly in the US equity market), and low equity risk premia leaves an unexciting outlook overall on a risk-adjusted basis, relative to cash returns," Goldman Sachs said. "In the absence of recession, corporate earnings rarely fall. On a weighted basis, we expect 8% price returns and 10% total returns for Global equities over the next year, taking them towards the upper end of the Fat & Flat range that they have been in since 2022," Goldman Sachs said.Ĭorporate earnings should also remain solid next year, providing a buoy to stock prices, as long as a recession is averted. "As higher-for-longer interest rates make valuation expansion from here difficult to justify, our market forecasts are broadly in line with earnings growth. Goldman Sachs expects the S&P 500 to finish 2024 slightly higher from current levels as stocks are stuck in a "fat and flat" range since 2022. ![]() Morgan Stanley recommended investors avoid the high-priced tech stocks and instead focus on defensive growth stocks, typically found in the healthcare, utilities, and consumer staples sectors, as well as late-cycle cyclical stocks typically found in the industrials and energy sectors. "We think these dynamics are likely to persist into early 2024 before a sustainable earnings recovery takes hold (we ultimately see +7% earnings growth next year)." "The question for investors at this stage is whether the leaders can drag the laggards up to their level of performance or if the laggards will eventually overwhelm the leaders' ability to keep delivering in this challenging macro environment," Morgan Stanley said. ![]() The extremely narrow leadership of the mega-cap tech stocks is likely to continue early next year, but eventually breakdown, according to the firm. Morgan Stanley expects a flat stock market in 2024, but sees some pockets of the stock market performing better than others. Morgan Stanley: neutral, S&P 500 price target of 4,500 Unless a recession occurs imminently or inflation completely collapses, the Fed is unlikely to cut rates before next summer," BCA Research said.īCA Research said a recession next year would put the S&P 500 in a range of between 3,300 and 3,700 before an eventual rebound materializes. "We remain in the disinflationary camp, but expect that inflation will not slow quickly enough for the Fed and the ECB to cut rates in time to prevent a significant rise in unemployment. The stock market could avoid such a steep drawdown next year if the Federal Reserve swiftly cuts interest rates, but BCA Research isn't holding its breath as they don't expect inflation to fall quickly. As such, the risk/reward balance is quite unfavorable for stocks," BCA Research said. ![]() Developed markets (DM) remain on a recessionary path unless monetary policy eases very significantly. "A recession in the US and euro area was delayed this year but not avoided. The S&P 500 could experience its worst crash since 2008 next year as a recession kicks off, according to the 2024 outlook of BCA Research. BCA Research: bearish, S&P 500 price target of 3,300
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