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December Update (BONUS SECTION at the end)
💡 10 December Markets Summary
In 2022, the S&P 500 bounced back from its worst year in over a decade, and it is on track to finish 2023 up as well, with a gain of about 21% through November 30. The ride for investors hasn’t always been a smooth one, though. Most of the market’s gains came early in 2023.
As of the end of November 2023, the S&P 500 has posted a total return of about 21% for the year, well above its average annual return of around 10%.
The stock market’s stability and strong performance heading into 2024 are particularly impressive given how a regional banking crisis rattled the markets in the spring of 2023.
In a span of just a few weeks, mounting losses on cryptocurrency investments, sharp downturns in the value of bond portfolios and commercial real estate investments, not to mention aggressive runs on bank deposits, triggered the collapse of Silvergate Bank, Silicon Valley Bank, Signature Bank and First Republic Bank.
The biggest market moving factors in 2023 appear to have been inflation and interest rates.
Higher interest rates increase borrowing costs for consumers and companies, weighing on economic growth and profitability.
Looking ahead, the bond market is pricing in a nearly 80% chance the FOMC will pivot from rate hikes to rate cuts by May 2024.
Bill Adams, chief economist for Comerica Bank, says U.S. consumers have held up relatively well in 2023 despite a difficult environment.
Heading into 2024, economists and analysts are relatively bullish on the outlooks for the economy and the stock market. Elevated interest rates will likely weigh on economic growth, but the Federal Reserve is projecting U.S. GDP growth will remain positive in the coming year.
Analysts are forecasting 11.6% earnings growth for S&P 500 constituents in 2024, and the average analyst S&P 500 price target of 5,029 suggests the index will gain about 10% and make new all-time highs in the next 12 months.
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Disclosure
This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. This material has been prepared for informational purposes only. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation.