Market strategists are divided on whether there will be a year-end rally in the stock market. Some believe that a rally is unlikely due to soaring bond yields, a conflict in the Middle East, and a challenging earnings season. The average forecast of 16 strategists in a Bloomberg survey predicts minimal gains for European stocks, with the Stoxx Europe 600 index expected to end the year just 1% above its current level. On the other hand, there are reasons to believe that the stock market will rally into year-end. Stabilizing profits, improving inflation data, lower interest rates, and reduced bearish sentiment among active investment managers are some of the factors contributing to this view. Nuveen Asset Management's CIO, Saira Malik, predicts a year-end rally in US stocks as concerns about rate hikes and bond yields subside. She expects the S&P 500 Index to end December at the 4,300 level, with gains for the year reaching 12%. Malik believes that if geopolitical issues do not significantly impact oil prices, the markets will rally into year-end and 10-year yields will flatten out. She notes that cash on the sidelines and bearish investor sentiment are usually bullish signs. Malik prefers technology as a long-term investment, particularly companies like Microsoft, Amazon, and Nvidia, which have dominant positions in artificial intelligence and logistics. However, she remains neutral on stocks and anticipates a possible recession in 2024 or early 2025. In light of this, she favors defensive sectors such as infrastructure and dividend growers. A Wall Street bear predicts that stocks will not see much growth next year, with a year-end target for the benchmark index of 4,500, representing nearly 2% upside to current levels. The bear cites a challenging near-term backdrop and cautious corporate commentary as reasons for the limited growth. However, the bear expects positive operating leverage and margin expansion to drive earnings growth in the medium term. The bear also sees stock-specific risks remaining elevated and recommends a defensive growth and cyclicals strategy.
Morgan Stanley strategist Michael Wilson predicts a rocky end to the year for US stocks due to fluctuating bond yields. He expects near-term volatility in both rates and equities in December, followed by more positive seasonal trends in January. The S&P 500 had a strong rally in November, but is now in overbought territory, which could lead to a selloff. However, the MACD momentum for the index remains positive. Wilson believes that a slowing economy and drop in inflation could lead to the Federal Reserve reducing rates as early as March, which would be bullish for equities. Other Wall Street forecasters are also optimistic about the outlook for US stocks in 2024. Wilson is neutral for the year and expects the S&P 500 to end around 4,500 points, about 2% below current levels. The stock market is predicted to have a disappointing summer, with stable or negative returns expected. Wall Street veterans David Morrison and Will McGough believe that stock prices are already high and unlikely to rise further. Morrison expects the benchmark index to experience sharp corrections and end the year around 4,500. McGough sees the S&P 500 ending the year almost flat. Both experts warn of obstacles in the second half of the year, including a potential recession and political volatility. Other strategists have also warned of a tough road ahead for stocks. [db477188] [ec20bee4] [b0baf7e2] [2c0c4cca] [b65656bf] [c53c2909] [33192c0e]