Investors are eagerly anticipating the new year, wondering what it will bring for the stock market and the economy as a whole. With 2023 ending on a high note, many are wondering if the upward trend will continue in 2024. Wharton Professor of Finance, Jeremy Siegel, recently shared his predictions for the new year on CNBC’s “Closing Bell.”
Siegel’s forecast for 2023 was surprisingly accurate, as the S&P 500 and SPDR S&P 500 ETF (SPY) saw impressive gains of nearly 25% and the Nasdaq rose by 35%. Looking ahead, Siegel remains bullish on equities and expects the markets to continue climbing in 2024. He predicts that by the end of the year, we could see another 10% to 12% increase in the markets. Specifically, Siegel suggests that the S&P 500 could reach 5400 by the end of 2024 and 6000 by the end of 2025.
One contributing factor to this positive outlook is the Federal Reserve’s flexible monetary policy. Following the Fed’s December meeting, Fed Chair Jerome Powell indicated that the central bank is open to lowering interest rates. This news has helped drive market enthusiasm and contributed to the strong performance at the end of 2023.
Siegel believes that a “soft landing” for the economy is increasingly likely, especially if market enthusiasm is combined with good earnings. This combination has the potential to drive the market even higher in 2024. However, he does voice concerns over the lack of liquidity and stagnation in money supply. Siegel argues that the Fed should cut rates to increase liquidity in the market, which could help sustain the upward momentum.
While the Fed has stated that its decisions will be data-dependent, Siegel believes that the first rate cut should occur in March. He emphasizes the importance of avoiding stubbornness on the way down, as the Fed was criticized for being slow to cut rates in the past.
Overall, investors can look forward to a positive outlook for the stock market in 2024, according to Jeremy Siegel. With the markets expected to continue climbing and the Fed potentially cutting rates to increase liquidity, there is optimism for another year of strong performance. However, it is important for investors to stay informed and monitor any changes in economic conditions that could impact their investment strategies.
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