Prepare for a rollercoaster ride in 2024, where the S&P 500 is poised to approach record highs, experience a downturn, and then stage a comeback, according to Société Générale.
In their outlook for the upcoming year released on Monday, the French bank anticipates the benchmark index to reach 4,750 points in the first three months of 2024, bringing it close to the all-time high of 4,796 recorded in January 2022.
However, the gauge of large-cap US stock prices is expected to retreat by 12% to 4,200 in the middle of 2024 due to a mild recession affecting the US. Following this dip, a recovery is foreseen, with the index bouncing back to 4,750 in the fourth quarter as the Federal Reserve initiates interest rate cuts, as per Société Générale.
Manish Kabra, Head of US Equity Strategy, noted, “By the end of the year, we expect to see rate cuts by the Fed of 150 basis points, a downturn in GDP growth and clarity on the political election cycle. The S&P 500 should be in ‘buy-the-dip’ territory, as leading indicators for profits continue to improve.”
However, Kabra cautioned that the journey throughout the year is unlikely to be smooth, foreseeing a mild recession in the middle of the year, a credit market sell-off in the second quarter, and ongoing quantitative tightening.
As of the latest closing bell on Wednesday, the S&P 500 was trading at 4,556. It has experienced a 19% year-to-date climb, driven by the outstanding performance of the “Magnificent Seven” Big Tech stocks and investor optimism regarding potential cuts in borrowing costs by the Federal Reserve.
Manish Kabra isn’t the sole prominent Wall Street strategist projecting the index’s flirtation with record highs in the coming year. Earlier this month, David Kostin of Goldman Sachs predicted the S&P 500 to reach 4,700 points by the end of 2024. Furthermore, both Bank of America and RBC Capital Markets have set year-end targets at 5,000, comfortably surpassing the previous record highs.