2024 Outlook - A Turning Point

2024 Outlook - A Turning Point

January 06, 2024

Over the last two years, investors have heard about inflation and volatility and have been hoping for a sense of balance, can we expect to see a return to the status quo?

Our friends at LPL Research recently released their 2024 Outlook which they have titled "A Turning Point". Marc Zabicki, the Chief Investment Officer for LPL Financial, stated “Despite a likely mildrecession in 2024, both bonds and stocks should do well as we anticipate the Federal Reserve will begin to roll back some of 2023’s interest rate increases". We've already seen some proof to what Marc has said, with the Federal Reserve deciding to not increase rates during their last 4 meetings. Now, this does not mean 2024 won't have any volatility, especially with this year being an election year (Election Years and the Stock Market). However, in 2023 the overall economy was strong and the markets benefited, all while the Federal Reserve continued to raise interest rates for the first 7 months. 

It’s easy to think stocks need to drop in 2024 after such a strong year, in 2023, but the data says otherwise:

  • The S&P 500 gained 24.2% in 2023 excluding dividends, slightly behind 2021 (+26.8%) and 2019 (+28.9%) as the best years of the past decade by more than double the long-term average gain for the index of about 9%.
  • There have been 19 years in which the S&P 500 gained 20% or more since 1950. The average gain in the following year was 9.6%, with a median gain of 11.4%.
  • The index has been positive during 15 of those 19 years that followed 20% gains the prior year, suggesting that strength begets strength.
  • A 9–10% gain for the S&P 500 this year, as this study suggests, would be ahead of the LPL Research forecast for mid-single-digit S&P 500 returns and a reasonable chance at upside. But if rates cooperate and recession is averted, that type of 2024 for stocks seems reasonable.

Source: LPL Research

Click here to read the full report: Outlook 2024: A Turning Point