Forecast for 2024: Moderate Double-Digit S&P 500 Gains Expected
After a strong 26.6% return in 2023, many investors are skeptical about what lies ahead in 2024. However, renowned investor Ken Fisher remains optimistic, predicting moderate double-digit gains for the S&P 500 in the coming year. He believes that the current skepticism is actually a positive sign, as it’s harder to kill a young bull market than most people realize. Fisher expects big growth stocks to lead the market early in the year, with a potential shift to value stock leadership later in 2024.
Similarities between 2024 and 1968 could shape the market
Drawing parallels between 2024 and 1968, Fisher predicts that the S&P 500 will return roughly 11-18% in the coming year. He expects ongoing inflation to slow down and the U.S. economy to experience moderate growth, leading to normalized inflation rates. In terms of politics, Fisher predicts a Republican, likely Donald Trump, will win the White House. The GOP is expected to take the Senate but may lose the House, similar to the political landscape in 1968.
Political Outlook: Republican Victory in the White House, Senate Likely, House In Flux
Fisher believes that the political landscape will be a tailwind for the market in 2024. Since 1925, the S&P 500 has climbed in 83.3% of presidential election years, with average returns of 11.4%. Whenever the second year of a president’s term has been negative, as was the case in 2022, the following election year has always been positive since 1932. Fisher expects this trend to continue and anticipates positive market returns in 2024.
Historical Trends: Positive Returns in Presidential Election Years, Especially After Negative Second Year
In further support of his positive outlook for 2024, Fisher highlights the historical trend of positive market returns in presidential election years. He notes that there is often initial fear and uncertainty surrounding the outcome of the election, but that sentiment typically improves after the election. Fisher expects the winner of the 2024 election to be better received than initially anticipated, leading to improved market sentiment.
Value Stocks to Benefit from Rate Cuts and Bank Lending in 2024
Fisher believes that value stocks will excel in 2024, particularly as rate cuts and increased bank lending come into play. He explains that rate cuts can stimulate lending, which benefits value stocks that rely on bank funding for expansion initiatives. While growth stocks are likely to lead early in the year, Fisher predicts a shift to value stock leadership later on as rate cuts stimulate bank lending and boost the profitability of these stocks.
Overall, Fisher’s forecast for 2024 is a positive one, with expectations of moderate double-digit gains for the S&P 500. He believes that the current skepticism in the market will ultimately prove unfounded and that the young bull market still has plenty of room to grow. With a Republican victory in the White House and potentially favorable political dynamics, Fisher is optimistic about the market’s prospects in the coming year.
Analyst comment
Positive
As an analyst, I expect the S&P 500 to experience moderate double-digit gains in 2024, with potential shifts in leadership from growth stocks to value stocks. The political landscape, with a Republican victory in the White House and potential favorable dynamics, is expected to be a tailwind for the market. Historical trends and the expectation of rate cuts and increased bank lending further support the positive outlook. Overall, the market is anticipated to perform well in 2024.
