Analysts at BMO Capital Markets are bullish about the stock market in 2024, suggesting that the S&P 500 will climb 12% next year.
Market strategists at BMO Capital Markets are optimistic about the trajectory of US stocks in 2024, projecting solid but slightly tempered gains compared to 2023. BMO Chief Investment Strategist Brian Belski and his team anticipate a continuation of the bull market, with the S&P 500 potentially reaching 5,100 by the end of 2024. This indicates an approximate 12% increase from current levels.
The strategists emphasize the continuity of the ongoing bull market, now stepping into its second year. Their analysis aligns with historical patterns of bull markets, foreseeing a phase of sustained yet more moderate growth. Despite the index’s failure to surpass its January 2022 all-time high, the steady climb in 2023 has fortified confidence in the market’s upward trajectory.
BMO Expectations of the S&P 500 and General Investment Outlook
BMO’s outlook hinges on a resurgence in S&P 500 earnings, with a projected 13.6% increase in 2024—a marked rebound from the 2.6% climb anticipated for 2023, according to LSEG data. The firm expects volatility to subside as the economy continues to show signs of resilience, coupled with a decline in inflationary pressures.
Furthermore, these analysts anticipate a significant shift in market leadership patterns. This should mark a deviation from the dominance of mega-cap stocks that steered equity indexes in 2023. BMO foresees a need for diversified investments across sectors, styles, and sizes, emphasizing the need to move from the trends that dictated the market in preceding years.
Brian Belski underscores a broader transformation in the investment landscape, advocating a move towards a more ‘normal for longer’ trend. The strategists believe the market will favor a return to fundamental and company-specific analysis, deviating from the prolonged era of liquidity-induced performance and unconventional investing strategies. This process, expected to extend over three to five years, is deemed an opportunity for “good old-fashioned stock picking.”
Generally, Belski remains bullish on the market’s resilience, dismissing concerns of an imminent recession due to robust labor demand. Should a downturn materialize in 2024, he suggests it would be a “recession in name only.”
Broader Implications and Strategy for Investors
In light of the projected market shifts, BMO advises investors to maintain balanced portfolios with diverse assets. In addition, the analysts encourage market players to shift from overemphasizing specific sectors or styles. Active investment strategies are deemed crucial in 2024, as the larger stocks driving performance in 2023 are unlikely to sustain their momentum. This should compel investors to explore opportunities across a broader market spectrum.
In the finance and cryptocurrency space, analysts also observe similar trends of market diversification and redefined leadership. The crypto industry has witnessed such shifts in market dynamics, with Bitcoin (BTC), the world’s largest cryptocurrency, experiencing unstable dominance. According to CoinMarketCap data, BTC dominance is at 51.6%, compared to 53% around the same time last month. Although BTC’s dominance is still the largest in the market, the situation hints at a market poised for increased diversity and opportunity.
