Market Defies Expectations: Stocks Soar to New Heights
As 2024 comes to a close, the stock market has left even the most optimistic forecasters in awe. Despite predictions of a modest gain, the S&P 500 Index has surged over 23%, marking the strongest back-to-back annual runs since the dot-com bubble of the late 1990s.
A Year of Surprises
Last year, strategists at top firms like Bank of America Corp., Deutsche Bank AG, and Goldman Sachs Group Inc. predicted a modest gain for the S&P 500. However, the market had other plans. Equity prices continued to soar, with the S&P 500 hitting one record high after another.
The AI Factor
The artificial intelligence (AI) breakthroughs have been a significant driver of the tech-stock boom. Big tech companies like Alphabet Inc., Apple Inc., Meta Platforms Inc., and Nvidia Corp. have seen their stocks rise significantly, contributing to the market’s upward trend.
Economic Strength Supports Market Rally
The economy’s strength has also played a crucial role in supporting the stock market’s rise. Corporate profits have trickled down, and the excitement around AI has continued to push up tech stocks. Additionally, Donald Trump’s presidential victory has promised tax cuts and corporate-friendly policies, further boosting the market.
A Shift in Sentiment
The rally has largely extinguished bearish sentiment on Wall Street, with many strategists ditching pessimistic calls. Morgan Stanley’s Mike Wilson, who previously warned of a potential slide, turned positive on stocks in May. JPMorgan Chase & Co.’s Marko Kolanovic, who predicted a 12% tumble, left the bank in mid-2024.
Looking Ahead
Dubravko Lakos-Bujas, who now heads JPMorgan’s market research team, predicts the S&P 500 will continue to climb next year, citing an easing Fed, the change of power in Washington, and a Chinese government eager to keep its economy humming. His target of 6,500 for next year implies a gain of about 9% from current levels.
Valuation Concerns
While the market’s steep climb has raised concerns about valuations becoming too stretched, particularly for AI-related companies, few are calling for the rally to end. In fact, none of the 19 strategists tracked by Bloomberg expects the S&P 500 to decline next year.
A Bullish Outlook
Binky Chadha, chief US equity and global strategist at Deutsche Bank, has been among the bullish cohort on Wall Street for the past three years. His 2025 target of 7,000 points is among the most optimistic, reflecting his expectation for continued economic growth and low unemployment.
Leave a Reply