Goldman Sachs Forecasts Positive Outlook for Russell 2000 in 2024
Goldman Sachs strategists have recently shared their positive outlook for the Russell 2000 (RUT) and small-cap stocks in general in 2024. With a combination of favorable factors such as current low valuations and a positive economic outlook, analysts anticipate further gains for US small-cap stocks.
Small-Cap Stocks Expected to See Continued Gains, says Goldman Sachs
According to Goldman Sachs, the Russell 2000 small-cap index is projected to deliver a return of approximately 9% over the next six months and 15% in the next 12 months. This optimism stems from the belief that small-cap stocks have the potential to outperform larger companies in the coming year. While the large-cap forecast sees a rise of 7% to 5100 by the end of 2024, it’s worth noting that this includes dividends, resulting in a total return of 9%.
Analysts Predict 9% Return for Russell 2000 in Next Six Months
Despite a notable rally in recent months, the Russell 2000 small-cap index still remains nearly 20% below its peak in November 2021. In contrast, the S&P 500 index is currently less than 1% below its January 2022 peak. However, analysts remain optimistic about the future performance of the Russell 2000, anticipating a return of approximately 9% over the next six months. This projection is based on factors such as low valuations and a positive economic outlook.
Small-Cap Valuations Remain Low, Providing Opportunity for Investors
Goldman Sachs analysts highlight that small-cap stocks are currently trading at low valuations relative to historical levels. This can be observed through the Russell 2000 price-to-book multiple, which indicates that small-caps are undervalued compared to their historical averages. These low valuations present an opportunity for investors looking to capitalize on potential future growth in the small-cap sector.
US Economic Growth Drives Small-Cap Returns, Despite Potential Risks
The primary driver of small-cap returns is expected to be US economic growth. The positive outlook for the economy, along with various supportive factors, suggests that small-cap stocks have the potential to perform well in the coming years. However, it’s important to note that small-caps have exhibited increased sensitivity to interest rates in the past two years. While the biggest risk to the small-cap outlook is a deterioration in investor expectations for US economic growth, the lower valuations currently seen in small-cap stocks provide a cushion for the Russell 2000 even in the event of weaker-than-expected growth.
These forecasts remain subject to various factors and risks, but Goldman Sachs’ positive outlook for the Russell 2000 and small-cap stocks underscores the potential for continued gains in the coming year. With low valuations and a positive economic backdrop, small-caps may present an attractive investment opportunity for investors seeking growth in their portfolios.
Analyst comment
Positive news: Goldman Sachs Forecasts Positive Outlook for Russell 2000 in 2024. Analysts anticipate further gains for US small-cap stocks due to low valuations and a positive economic outlook. The Russell 2000 is projected to deliver returns of approximately 9% in the next six months and 15% in the next 12 months.
As an analyst, I expect the market to react positively to this news, with the Russell 2000 and small-cap stocks potentially experiencing continued gains. Investors may see this as an attractive investment opportunity, especially considering the low valuations and positive economic backdrop. However, risks such as interest rate sensitivity and investor expectations for US economic growth should be monitored.
