Source: Bloomberg
Author: Jess Menton, ELENA POPINA, Ishika Mookerjee
The US stock market rising in 2023 is about to end. The S & P 500 index is only one step away from the first historical high in the past two years.Looking forward to 2024, investors are optimistic.
Given that the Federal Reserve hints that the interest rate hike may have ended, the market is increasingly concerned about risks other than monetary policy, such as economic prospects, corporate profits, and US presidential elections in November.
A key challenge faced by investors will be to evaluate the lagging effect of the Fed's interest rate hike cycle. The view of this issue has led Wall Street strategists to disagree with the trend of the stock market next year.Of course, many people have made mistakes in 2023. They originally expected that the stock market would do bad luck in 2023, but they never wanted to have a big S & P 500 index in the context of multiple banks closing, economic recession concerns, and interest rates for decades high.Reton more than 24%.
The following is the five themes that traders need to pay attention to in 2024:
Rest -rate interest rates
In recent months, the market has increasingly believed that the Fed will start to cut interest rates before mid -2024, which has provided support for the stock market.The market is digesting earlier and deeper interest rate cuts. Interest rate exchange traders bet on the Federal Reserve for about 150 basis points next year, which is twice that of Federal Reserve officials' predictions.
The S & P 500 index is less than 0.5%of the historical closing high at the historic closing of January 3, 2022.The expectations of about 20 analysts announced on December 19 showed that their average expectations for the S & P 500 index at the end of 2024 were 4833 points, which was only about 1%compared with the current point of the index.
The growth status of large technology companies
From Nvide to Microsoft. With the heating up of artificial intelligence, the seven major technology stocks have contributed 64%of the S & P 500 Index ’s increase of 64%as of last week.According to data from Bloomberg Industry Research, these seven giants, including Amazon, Apple, Google's parent company Alphabet Inc., Meta Platforms Inc. and Tesla -The overall profit increase of the S & P 500 Index.The key question is that how much this expectation has been reflected in the stock price, especially in the context of the reinforcement of soft landing expectations.
Louis Navellier, an analyst at Navellier Associations, believes that six of the seven giants look good when they enter 2024.He wrote in a report that Apple is an exception. If there is no cutting -edge product or technology to increase profits, the company will only become a bystander.
US presidential election
Historically, the election of the current presidential election is usually good for the stock market.Stock Trader's Almanac said that since 1949, the S & P 500 index has increased by nearly 13%in the annual election.In the year without the election of the current president, the index declined an average of 1.5%.
The reason for the rise of the stock market in the previous case is that the current president usually implements new policies or promote tax cuts before the election vote to boost economic and confidence.
Asian Risk: Bank of Japan, China and India
Although the Nikkei 225 index climbed to 30 years in the context of the Central Bank of Japan's super loose policy and the weak yen, the Japanese stock market faced obstacles in early 2024.Japan is the last country in the world to maintain negative interest rates, but two -thirds economists predict that the Bank of Japan will raise interest rates for the first time since 2007.
At the same time, after seeing that many investors in China have gone through another disappointing year, investors will pay attention to the National People's Congress and the Central Third Plenary Session of the Central Committee of the Mainland Government to explore the economic growth goals of the Chinese government in 2024And fiscal stimulus clues.
India is a highlight of the highlights. The country is gaining various major manufacturing contracts, increasing infrastructure construction expenses and becoming a choice for replacement of China.
European Central Bank and the Bank of the United Kingdom
With the highest level of Stock Europe's 600 index nearly two years, and in view of that China may launch a fiscal stimulus policy, those cyclical stocks exposed to Asia may be the key to further rise.According to data from Bloomberg's research, although the weak economy may put pressure on European companies 'profitability, analysts' general expectations are the increase in profit in 2024 about 4%, which will mainly benefit from the rise in profit margins.
The bond market is expected to cut interest rates by the European Central Bank by April, which may further boost the stock market in the region.Since the United Kingdom is one of the countries with the highest inflation rate in the Seventh -way Group, the British Bank is expected to relax the policy later than the Fed and the European Central Bank.
