Wall Street analysts are flagging several risks as U.S. stocks conclude a dynamic 2023, marked by record highs in the Dow and the S&P 500. Despite the two-month sprint that propelled the market, concerns are emerging among portfolio managers and strategists about a possible market downturn in January 2024.
Instead of riding the wave of positive momentum, some experts worry that the “January effect” may work in reverse, with investors rushing to secure gains after the S&P 500’s impressive 24% rise in 2023, according to FactSet data.
Various factors are contributing to these concerns, encompassing overbought conditions, a shift from extremely bearish to extremely bullish sentiment, a notably low VIX, and the impending release of an inflation report.
In summary, as 2023 concludes on a positive note, analysts urge caution and vigilance in monitoring multiple indicators and events that could impact market dynamics as the calendar turns to January 2024.
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