Perhaps standing at the end of 2022, most investment banks did not expect that in 2023, U.S. stocks will be soaring in the "gunfire" of interest rate hikes. As of December 22**, the S&P 500 and Nasdaq 100 are up more than 24% and 54% year-to-date.
According to the data, the S&P 500's gains this year are mainly driven by the "Big Seven" of technology stocks - Apple, Microsoft, Google, Amazon, Meta and the latest entrants to the group, Nvidia and Tesla. Aside from the "Big Seven", nearly one-third of S&P constituents are still ** so far this year. At the same time, 72% of S&P constituents underperformed the index, the highest level since 2000.
A resilient U.S. economy in 2023, moderate inflation, and interest rates that may have peaked are pushing investors to overcome recession fears.
So can a "soft landing" for the U.S. economy be achieved in 2024?How will the U.S. affect U.S. stocks?Will U.S. stocks reverse their rally in 2024?
To this end, Wall Street has compiled the latest ** of the top ten Wall Street investment banks on U.S. stocks and the U.S. economy in 2024, and analyzed the trend of U.S. stocks in 2024 from three perspectives: bearish, neutral and bullish.
Among them, the bears are mainly JPMorgan Chase, the neutrals are Morgan Stanley, Wells Fargo and Barclays, and the bulls include Bank of America, Goldman Sachs, Royal Bank of Canada (RBC), HSBC, Citigroup and Deutsche Bank.
JPMorgan Chase & Co.'s chief market strategist Marko Kolanovic is bearish, expecting the S&P 500 to target $4,200 in 2024 and earnings per share of $225 in his latest research report.
Kolanovic believes that the US economic growth will gradually slow down next year (by the fourth quarter of 2024, the US economic growth rate will increase from 28% to 07%), the Fed seems unlikely to cut interest rates quickly, and investors should prefer cash over **::
Investors are too confident that a recession will be avoided in 2024, and with the fact that valuations and volatility are high, now is not the time to make a big move.Kolanovic noted in the reportThere is a lag in the impact of high interest rates over the past 18 months on the economy, which will have a negative impact on economic activity in 2024, with excess household savings being depleted and consumption growth on the verge of slowing
With consumption set to slow further, geopolitical conflicts remaining, and limited upside, we remain cautious about the macro outlook for the U.S. and the U.S.At the same time, Kolanovic does not believe that the Fed will cut interest rates aggressively in 2024, inflation remains stubborn, and it will be difficult to reduce the Fed's target level from the current 3% to the Fed's 2% target. He said only a weaker labor market could bring inflation back to 2%.This means that the Fed may cut rates less than expected in 2024. Under the above factors, Xiaomo believes that the consensus that the market expects a significant increase in earnings per share in 2024 is unrealisticCorporate pessimism should be the catalyst for a sharp downward revision of forecasts early next year.Monetary policy headwinds, as well as a reduction in fiscal stimulus, should lead to a larger-than-expected slowdown in economic growth in 2024.
One of Wall Street's well-known bears, Mike WilsonDa Mo strategists predictThe S&P 500 will close at 4,500 points in 2024 with earnings per share of $229, and the company will usher in a full-year earnings recovery.
Wilson bluntly said in the report that the Fed's policy pivot is "good news for **", which means that the Fed is starting to focus more on the economy ** than worrying about whether the decline in inflation can be sustained, then the probability of a soft landing will rise, which will drive small-cap stocks and other sectors that have performed weaker than ** this year to usher in catch-up**.
If inflation stabilizes at higher levels, small-cap cyclicals and low-quality** could be the beneficiaries. Of course, this is a delicate line when inflation statistics are still above target. If these data start to pick up, the Fed could reverse course.Da Mo analysts believe that with the reduction of labor costs, the S&P 500 constituents will increase earnings per share (EPS) by 7% next year, revenue growth by 4-5%, and profit margins will grow "moderately", and the expected price-to-earnings ratio at the end of next year is expected to be 17 times.If the U.S. economy soft-lands without triggering a re-acceleration in inflation, small-cap stocks, which tend to be more sensitive to changes in interest rates and the economic outlook, could continue to move higher on a sharply** basis for November.
Wells Fargo analysts expect the S&P 500 to end the year with a target of 4,625 points and earnings per share of $235. With a low volatility index, tighter credit spreads, and a rising cost of funds, it's time for the rally in U.S. equities to slow down. The S&P 500 is expected to be volatile in 2024, almost the same as it was at the end of the yearHigh valuations limit upside, while interest rate uncertainty increases downside risks.
In a recent report, the team led by Barclays** strategist Venu Krishna raised the S&P 500 price target for 2024 by 300 points to 4,800. The report states:U.S. stocks will return single-digit returns next year, reflecting a gradual slowdown in economic growth despite easing inflation.
Barclays raised its S&P 500 EPS forecast for next year to $233 from $223 on optimism about the company's earnings outlook, but even the adjusted estimate was still $13 below consensus estimates.
The report argues that as global economic activity begins to decelerate next year,The current consensus for double-digit EPS growth in 2024 is overly optimistic, with ** stocks outperforming small-cap stocks and placing more emphasis on value and quality factors over growth
Continued resistance to inflation, weak industrial output, and slower growth outside the U.S. will weigh on the U.S. market.The S&P 500 is expected to end the year with a target of 4,700 points and earnings per share of $237. Goldman Sachs' base case for next year is that the U.S. economy continues to expand at a modest pace to avoid a recession, and the S&P 500 is valued at 18x, close to the current price-to-earnings ratio.
UBS believes that there is a huge gap between the current strength of US stocks and the weakness of economic expectations, which is likely to put investors in a dilemma
It is recommended to maintain a cautious stance ahead of the release of US economic data in 2024, focusing on three aspects: labor market conditions, credit performance and corporate earnings expectations.Bank of America believesIn 2024, U.S. stocks may fall first and then rise, and by the end of 2024, the S&P 500 index will reach 5,000 points
A bull market in U.S. stocks will only occur after a severe economic slowdown or credit risk event such as a significant decline in credit risk,** and a significant decline in consumption, which will include panic, declining corporate profits, and concerns about Fed policy.In his latest report, Nicole Inui, head of strategy at HSBC, predicts that the S&P 500 could reach 5,000 points by the end of 2024, and that the S&P 500 could even be higher if the U.S. can avoid a recession.Three key factors – the 3Ps: super bearish market sentiment, corporate profit recession, and accommodative policy. The combination of these three is considered to be a signal of a shift to a full-blown bullish approach. In the short term, risk assets are expected to be **, and the correlation between US Treasury yields and stock prices will decrease.
INUI believes that the possibility of a Fed rate cut in the coming year is a tailwind for U.S. stocks, while the unexpected slowdown in the U.S. economy and the *** in November next year may become a headwind for U.S. stocks
If the Fed is able to bring inflation back to target without tipping the economy into a recession, thereby achieving a soft landing, the 5,000 may still be a bit conservative, as the S&P 500 has returned an average of 22% in the six months following the end of the rate hike cycle while avoiding a recession.Goldman Sachs analysts believe that the Federal Reserve will no longer be a "roadblock" on the road in 2024, and under the influence of rising interest rate cut expectations, the S&P 500 index will be the first valueFrom 4,700 points to 5,100 points, the slowdown in inflation and the Fed's easing will keep real yields low, supporting the US ** earnings ratio of more than 19 times:
The first key factor driving 2024*** is,Inflation-adjusted real yields are starting to declineThe second point is that the profitability of S&P 500 companies is likely to remain strong based on current economic growth and expectations for future earnings growth.Deutsche Bank does not believe that the current valuation of US stocks is too high, and in its latest report, Deutsche Bank noted that corporate earnings will remain resilient even after a mild recession in the United States, which is expectedThe S&P 500 is on track to gain another 7% by the end of next year, closing at 5,100:
If there is a mild and brief recession in the US economy, corporate profits will grow by 10%. If the US gross domestic product (GDP) grows by 2%, profits are expected to grow by 19%. A "mild" recession in the US economy in the first half of next year will prompt the Fed to cut its policy rate by 175 basis points。**The U.S. economy will grow at a rate of just 0 next year6%。Wall Street news, welcome **app to see more.