2024 Market Outlook: Top Wall Street Bull Advises Investors Amidst Rally Pause

Oppenheimer’s John Stoltzfus foresees the U.S. stock market relying on data trends until the onset of the upcoming fourth-quarter earnings season, set to commence next Friday.

With a strong bull run that fueled double-digit growth in major indexes last year possibly slowing down in early January, Oppenheimer Asset Management strategists predict a subdued start for U.S. stocks in 2024.

Under the guidance of Chief Investment Strategist John Stoltzfus, the Oppenheimer team stresses the importance for investors to evaluate the substantial stock rally since October 27. The optimism surrounding potential Federal Reserve interest rate cuts in the first half of the year led to a significant uptrend in the closing months of the challenging 2023.

The S&P 500 surged by 11.2% in the fourth quarter, with a notable 4.4% increase in December alone, resulting in an impressive annual gain of 24.2%. This performance marked the best quarter for the large-cap benchmark index since the final quarter of 2020.

Stoltzfus and team anticipate a customary market pause after such a notable bull run and expect the stock market to stay “data-dependent” until pivotal market-moving events unfold later this month. Earnings reports, slated to be released from next week onward, are anticipated to serve as crucial catalysts for market conviction.

Major U.S. banks, including JPMorgan Chase, Bank of America, Wells Fargo, and Citigroup, are among the first set to report fourth-quarter 2023 earnings.

Despite the potential pause in the stock rally, Stoltzfus expresses confidence that it won’t impede the S&P 500 from reaching his team’s year-end price target of 5,200, indicating a 9.7% advance from the year’s start at approximately 4,742.

The strategists foresee “further upside” in stock prices throughout 2024, underpinned by fundamental improvements in the stock market. They maintain an overweight position on equities, favoring cyclical sectors over defensive ones. Additionally, Oppenheimer expects U.S. corporate revenues and earnings to continue growing in 2024, projecting S&P 500 company earnings to reach $240 per share.

While acknowledging current market conditions, including a forward earnings ratio of 19.6 times for the S&P 500, Stoltzfus and his team remain optimistic about the market’s resilience and growth potential. The S&P 500 closed at 4,742.83 on the first trading day of the year, and the Dow Jones Industrial Average and Nasdaq Composite recorded mixed performances on Tuesday, finishing at 37,715.04 and 14,765.94, respectively.