As the new year begins, stock futures are showing a lack of movement in overnight trading. After an incredibly strong 2023, where the S&P 500 experienced a 24% rally, investors are eager to see what 2024 will bring. Although the Dow Jones Industrial Average futures rose slightly by 18 points, the S&P 500 futures and Nasdaq 100 futures remain steady. With the markets being closed on New Year’s Day, anticipation builds as investors eagerly await the market’s opening.
The stock market’s performance in 2023 was remarkable, with the S&P 500 climbing for nine consecutive weeks and achieving its best win streak since 2004. Despite regional banking crises and conflicts in Ukraine and the Middle East, risk assets enjoyed a relief rally due to a resilient economy and cooling inflation. The technology sector, particularly mega-cap stocks, played a significant role in the market’s success. Apple saw a staggering 48% increase, Microsoft surged by nearly 57%, and Nvidia experienced a remarkable 239% jump. The Nasdaq Composite, heavily influenced by these tech companies, ended the year with a 43.4% gain, its best performance since 2020. Meanwhile, the Dow Jones Industrial Average recorded a 13.7% increase and set a new record.
Despite the exceptional performance of the stock market in 2023, Wall Street strategists expect significantly lower returns in the new year. In CNBC PRO’s exclusive Market Strategist Survey, the top 14 strategists from major firms predict that the S&P 500 will only end 2024 at 4,881, a mere 2.3% increase from the previous year’s close. Concerns over a weaker economy and tepid consumer spending contribute to this cautious outlook. If the economy falters and earnings growth slows down for Corporate America, the biggest risk for equities lies in potential declines in earnings per share. Adam Crisafulli, founder of Vital Knowledge, expressed this concern by stating, “The biggest actual risk facing equities isn’t the Fed or [European Central Bank] not cutting as much as anticipated, but instead that [earnings per share] suffers a larger than expected decline amid an environment of cooler growth and waning price power.”
As the stock market gears up for the new year, investors are met with a lack of movement in stock futures. The impressive performance of the market in 2023, driven by the technology sector, has set high expectations for the upcoming year. However, Wall Street strategists are skeptical about the market’s ability to maintain its momentum, predicting lower returns for the S&P 500 in 2024. With concerns over a weaker economy and earnings growth, investors must navigate an uncertain market landscape. Only time will tell if the stock market can continue its winning streak or if challenges lie ahead.