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Stocks will have another banner year in 2024, according to Deutsche Bank.
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The benchmark S&P 500 will climb 12% to hit a new all-time high of 5,100, strategists said.
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Much of Wall Street has turned bullish on the index, which has defied gloomy predictions to rack up stellar gains this year.
Deutsche Bank has become the latest big name on Wall Street to issue a bullish stock-market forecast for 2024, with analysts predicting the S&P 500 will soar to a fresh all-time high next year.
Strategists at the bank said Monday that they expect the benchmark share index to trade at 5,100 points at the end of 2024, which would be 12% higher than its current level and way clear of the previous record of 4,768 points, set in January 2022.
Bank of America, Goldman Sachs, RBC Capital Markets, and BMO Capital are among other well-known Wall Street firms that have predicted an upbeat 2024 for US equities.
Deutsche Bank’s bullish outlook is based off a view that the US is nearing a “soft landing” economic scenario, with inflation cooling while quarterly GDP growth remains strong.
“Core inflation has fallen… continued declines would return inflation to its pre-pandemic range without requiring slower growth,” a team led by Binky Chadha wrote in a research note seen by Business Insider.
Chadha’s team didn’t rule out the possibility of a recession, but said it was unlikely to have too much of a negative impact on stock prices “given that it is widely anticipated, and expected to be mild and short”.
In that scenario, S&P 500-listed companies’ earnings will still climb 10% in 2024, according to the strategists. That figure would rise to 19% if the US managed to dodge an economic slump, they added.
Dream economic scenario
Deutsche Bank’s cheery outlook reflects the fact that this has been a great year for both the economy and stocks.
The Federal Reserve’s aggressive interest-rate hikes from the back-end of 2022 have brought inflation down to 3.2% as of October, without tanking growth or the jobs market.
US GDP expanded 4.9% in the third quarter, smashing forecasters’ predictions, while the unemployment rate is still hovering below 4% despite fears the central bank’s rapid tightening campaign would drive widespread layoffs.
Meanwhile, equities have shook off analysts’ gloomy predictions to rally in 2023, with the “Magnificent Seven” Big Tech group – Apple, Microsoft, Google owner Alphabet, Amazon, Nvidia, Facebook parent Meta Platforms, and Tesla – leading the charge.
The S&P 500 is up an impressive 19% year-to-date, while the Nasdaq Composite has soared 36% and the Dow Jones Industrial Average has added just under 2,200 points.
Wall Street bullishness
There’s clearly an optimistic atmosphere amongst stock-pickers right now, with Deutsche Bank far from the only big name on Wall Street to predict the S&P 500 could climb to record highs.
Bank of America and RBC Capital Markets both predicted last week that the benchmark index will reach 5,000 points by the end of 2024, while Société Générale laid out a slightly trickier scenario where it trades at 4,750 year-end after plenty of recession-fueled volatility.
BMO Capital joined the party Monday, with chief strategist Brian Belski saying stocks are at the beginning of a multi-year bull market and echoing Deutsche’s prediction that the S&P 500 will hit 5,100. Goldman Sachs projects the index rising to 4,700 next year.
Burnishing Chadha’s credentials is the fact that he was one of the only Wall Street strategists who called this year’s surprise stock-market rally.
He wrote in Deutsche Bank’s outlook, published this time last year, that the S&P 500 would surge in early-2023, give up some of its gains as a recession hit, and then rebound to 4,500 by year-end. The gauge traded just 50 points clear of that level as of Monday’s close.
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