Stocks Beat the Odds This Year. They Can Do It Again in 2024.

Against long odds, 2023 has been a splendid year for markets. The S&P 500 index has risen 23% and the Nasdaq Composite has shot up 41%, fueled by an unexpectedly strong economy, the artificial-intelligence ambitions of Big Tech, and lately, the prospect of interest-rate cuts in the 2024. Even the bond market has perked up after a historic downturn, one that briefly sent yields to highs not seen since before the 2008-09 financial crisis.

As investors chill the bubbly for their year-end celebrations, they should lay in more for 2024. While the S&P 500 isn’t cheap at 19 times next year’s expected earnings, and the timing and pace of rate cuts are uncertain, stocks look poised for another strong year, with this year’s narrow rally broadening out to encompass many more issues.

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It is likely to be a volatile year, with markets buffeted by shifting expectations for the economy and interest rates, geopolitical surprises, and the political surprises of a presidential election season. But important debates about the trajectory of inflation and rates presumably will be settled by year end, leaving investors to look forward to more good news in 2025.

Barron’s recently canvassed six market strategists and chief investment officers about their market and economic forecasts for 2024. Their average year-end S&P 500 target: 4838, up only 3% from Thursday’s close of 4719. Then again, the benchmark index has rallied 12% just since the start of November. Like this year’s late rally, there is good reason to think that 2024, too, will end with a bang, lifting the stocks well above Wall Street pros’ targets.

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