After a bull market in 2023, let’s look at the 2024 Wall Street forecasts for the S&P 500. Overall, the 2024 S&P 500 targets range from 4,200 to 5,500, implying returns between -8.1% and +20.3% from 4,559.
Obviously, anything can happen between now and the new year. In addition, plenty of economic data and corporate events will happen through 2024 that will make Wall Street strategists continuously change their forecasts.
Before we review the 2024 forecasts, let’s review which Wall Street firms came closest and farthest for 2023. I’ll also review my target.
Based on the S&P 500 at 4,559, the following Wall Street firms had the worst calls from their initial 2023 forecasts:
Barclays (3,675), Société Generale (3,800), Morgan Stanley (3,900), UBS (3,900), Citi (3,900), Blackrock (3,930), Bank of America (4,000), Goldman Sachs (4,000)
My favorite bearish Wall Street strategist was Mike Wilson, continuously pounding the table that the S&P 500 would drop to 3,200 in 2023 before ending at 3,900. Despite being so wrong, Mike will probably still get a nice bonus because he gained a lot of publicity.
Best 2023 Wall Street Forecasts For The S&P 500
Based on the S&P 500 at 4,559, the following Wall Street firms had the best calls from their initial 2023 forecasts:
JP Morgan (4,200), Jefferies (4,200), Wells Fargo (4,200), RBC Capital Markets (4,200), BMO (4,300), Nuveen (4,300), Oppenheimer (4,400), Deutsche Bank (4,500), Yardeni Research (4,800).
Well done strategists from the above firms. I hope you get big year-end bonuses!
Financial Samurai Reader Forecasts For The S&P 500
From 1,968 survey entries, the winning forecast were for the S&P 500 to close between 4,001 – 4,250 in 2023 (31%), followed by 3,751 – 4,000 (24%). For reference, the S&P 500 started 2023 at 3,824, so we were mostly neutral-to-bullish.
Here’s what I wrote at the end of 2022 for 2023. Half the battle is getting the direction right because your belief will make you invest or not.
I would love to believe Deutsche Bank’s 4,500 S&P 500 price target for 2023. If we do indeed get to 4,500 in 1H 2023, I will likely reduce my public equity exposure from 30% to 20% of my net worth. It will feel like a win to claw back most of the losses from 2022.
But I feel like the S&P 500 is going to be range-bound between 3,800 – 4,250, with a target price of 4,100 if I had to choose. The reasons include earnings declines, a stubborn Fed that wants to see millions unemployed, a recession, and skepticism about valuations. With the Fed still driving a bus with its engine on fire, it’s hard to know how much to pay for stocks.
Things looked dicey in October 2023 as the S&P 500 corrected by 10% back down to 4,117, but now we’re back to good times and I feel lucky. The rebound to almost 4,600 feels like another chance at life!
2024 Wall Street Forecasts For The S&P 500 (Stock Market)
Now onto the 2024 S&P 500 forecasts. Thanks to Sam Ro’s newsletter, TKER, I’ve rounded up twelve forecasts so far, and will continue to add more as I see them.
Most Bearish 2024 Wall Street S&P 500 Forecast: JPM
JPMorgan: 4,200, $225 EPS (as of Nov. 29) “With a stepdown in economic growth next year (US growth to slow to 0.7% YoY by 4Q24 from 2.8% 4Q23), eroding household excess savings and liquidity, and tightening credit, we see 2024 consensus hockey-stick EPS growth of 11% as unrealistic… Negative corporate sentiment should be a catalyst for sharply lower estimates early next year.“
Neutral 2024 Wall Street S&P 500 Forecasts: MS, UBS, Wells Fargo,
Morgan Stanley: 4,500, $229 EPS (as of Nov. 13, 2023) “Near-term uncertainty should give way to an earnings recovery… Our 2024 EPS estimate [of $229] is consistent with output from our leading earnings models, which show a recovery in growth next year as well as our economists’ expectations for growth next year… 2025 represents a strong earnings growth environment (+16%Y) as positive operating leverage and tech-driven productivity growth (artificial intelligence) lead to margin expansion. On the valuation front, we forecast a 17.0x forward P/E multiple at the end of next year (20-year average P/E is 15.6x; currently 18.1x).“ MS strategist Mike Wilson must have been replaced!
UBS: 4,600, $228 EPS (as of Nov. 8, 2023) “Our 2024 target is based on a YE 2024E multiple of 18.5x (a -0.7x multiple point contraction) applied to 2025E EPS of $249. While UBS anticipates a steep decline in yields over this period, higher equity risk premiums should offset this benefit.“
Wells Fargo: 4,625, $235 EPS (as of Nov. 27, 2023) “With VIX low, credit spreads tight, equities rallying, and cost of capital higher/volatile, it’s time to downshift. Expect a volatile and ultimately flattish SPX in 2024 (4625), as valuation limits upside and rate uncertainty elevates downside risk.“
Slightly Positive 2024 Wall Street S&P 500 Forecasts: GS, SG, Barclays
Goldman Sachs: 4,700, $237 EPS (as of Nov. 15, 2023) “Our baseline assumption during the next year is the U.S. economy continues to expand at a modest pace and avoids a recession, earnings rise by 5%, and the valuation of the equity market equals 18x, close to the current P/E level. Our forecast falls slightly below the typical 8% return during presidential election years.“
Societe Generale: 4,750, $230 EPS (as of Nov. 20, 2023) “The S&P 500 should be in ‘buy-the-dip’ territory, as leading indicators for profits continue to improve. Yet, the journey to the end of the year should be far from smooth, as we expect a mild recession in the middle of the year, a credit market sell-off in 2Q and ongoing quantitative tightening.“
Barclays: 4,800, $233 (as of Nov. 28, 2023) “Whether ‘new normal’ or ‘old,’ a roller coaster 2023 proved that this cycle is anything but. We expect US equities to deliver single-digit returns next year as easing inflation is offset by modest economic deceleration.“
Bullish 2024 Wall Street S&P 500 Forecasts: BoA, RBC, DB,
Bank of America: 5,000, $235 EPS (as of Nov. 21, 2023) “The equity risk premium could fall further, especially ex-Tech: we are past maximum macro uncertainty. The market has absorbed significant geopolitical shocks already and the good news is we’re talking about the bad news. Macro signals are muddled, but idiosyncratic alpha increased this year. We’re bullish not because we expect the Fed to cut, but because of what the Fed has accomplished. Companies have adapted (as they are wont to do) to higher rates and inflation.“
RBC: 5,000, $232 EPS (as of Nov. 22, 2023) “While the November rally has likely pulled forward some of 2024’s gains, we remain constructive on the U.S. equity market in the year ahead. Our valuation and sentiment work are sending constructive signals, partially offset by headwinds from a sluggish economy and uncertainty around the 2024 Presidential election. Our work also suggests that the greater appeal of bonds may end up being a dampener of US equity market returns but not necessarily a derailer of them.“
Deutsche Bank: 5,100, $250 (as of Nov. 27, 2023) “Are valuations high? We don’t think so. If inflation returns to 2%, as economists forecast and is priced in across asset classes, while payout ratios remain elevated, fair value in our reading is 18x, with a range of 16x-20x, which they have been in for the last 2 years. If earnings growth continues to recover as we forecast, valuations will remain well supported.“
Most Bullish 2024 Wall Street S&P 500 Forecasts: BMO, Capital Economics
BMO: 5,100, $250 EPS (as of Nov. 27, 2023) “[W]e believe U.S. stocks will attain another year of positive returns in 2024, albeit while demonstrating more sanguine, broadly distributed, and fundamentally defined performance relative to the last decade or so. In other words, normal and typical.“
Capital Economics: 5,500 (as of Dec. 1, 2023) “Still time for the S&P 500 to party like it’s 1999 …it has come a long way lately, thanks both to a rise in its valuation and to an increase in expectations for future earnings. …This partly reflects investors’ enthusiasm about AI technology. …if AI enthusiasm is inflating a bubble in the S&P 500, it’s one that is still in its early stages. We think the index could therefore make further gains: our end-2024 forecast is 5,500, ~20% above its current level.“
Positive On The Stock Market For 2024
Which 2024 S&P 500 price target do you agree with and why?
Personally, I’m bullish on the stock market for 2024 due to the following reasons:
- The Fed will start cutting rates by mid-2024, making borrowing costs cheaper
- The bond market will continue rallying in anticipation of growing rate cuts and declining inflation
- Lower rates make risk assets more attractive
- Inflation will unlikely experience an aggressive rebound like the 1970s
- Pent-up cash saved in money markets and Treasury bonds will find its way back into risk assets
- Any recession that comes will be mild and not cause a greater than 1-2% increase in the unemployment rate
- Corporate earnings are still expected to grow despite lackluster GDP growth forecasts
- Consumer spending is expected to shift back toward goods from services, and the S&P 500 has greater exposure to the goods sector
- The housing market will experience strengthening, which will boost consumer sentiment, spending, and household net worth
All this to say my year-end 2024 S&P 500 price target is 4,869 or 6.8% higher than 4,559. We’re talking about 19.8X 2024 P/E EPS if EPS grows to $246. Sounds expensive, but by 2H2024, Wall Street will be looking for 2025 EPS numbers, which could grow to $260 or more.
A 7% increase in the S&P 500 doesn’t sound amazing after a ~20% increase in 2023. However, a 6.8% increase compared to a Treasury bond yielding 3.75% sounds pretty good. That’s right. I expect the 10-year Treasury bond yield to fall to 3.75% or lower by 3Q 2024.
Upper Limit To The S&P 500 For 2024
With growing confidence the Fed will eventually pivot, there’s a chance of a return of mania in small caps, meme stocks, and startup valuations. I can easily see the biggest underperformers of 2023 outperforming the most in 2024 due to declining interest rates. There may be a rotation out of the Magnificent 7 mega-cap tech stocks to the “lowest quality” names.
The return of FOMO investing during an election year may push the S&P 500 to an upper limit of 5,243, or 15% from 4,559. As a result, I’m going to keep on investing in venture capital funds that invest in AI. I don’t have the time or risk-tolerance to actively trade small caps and meme stocks.
Lower Limit To The S&P 500 For 2024
On the downside, the S&P 500 could easily retreat to 4,200 (-7.9%) if the Fed delays cutting rates because inflation doesn’t go down as much as expected. The year-end 2023 rally has brought forward a lot of gains and expectations. As a result, earnings may disappoint. Commercial office debt could also cause more regional banks to blow up.
Below is a great chart from Bank of America Research highlighting how the S&P 500 return historically declines after the first Fed cut. The idea being that a recession overwhelms the positive benefits of lower interest rates.
Given the Fed tends to be late hiking rates and cutting rates, by the time the Fed starts cutting rates the economy may already be in trouble. That said, this is the most anticipated recession in history. So if one does happen, maybe it won’t be so bad.
No Bear Market In 2024
Overall, I think 2024 will be a decent year for stocks, real estate, and other risk assets. I doubt we’ll make another 20% in stocks just like I doubt there will be another bear market. Boring but slightly up is good!
I also see an asset class rotation from stocks into residential real estate, given the lag in price performance as well as pent-up demand. Investors are always hunting for the highest returns, no matter the asset class. Meanwhile, the richer you feel from stocks, the more money gets converted into real estate.
If 2023 taught us anything, it’s to stay invested for the long term. Just don’t forget to sell occasionally when you’ve made enough to buy what you want!
Loading …
I’d love to know your forecast for the S&P 500 in 2024 and why. I’ll be updating this post every quarter based on new data.
How I Plan To Invest In Stocks In 2024
For now, here’s how I plan to invest in stocks and bonds for 2024. My thoughts will most certainly change over the year.
- Max out my tax-advantaged retirement accounts (SEP IRA, Solo 401(k)). Employees can contribute $23,000 pre-tax to their 401(k)s in 2024.
- Contribute the gift-tax limit maximum of $17,000 to each of my kids’ 529 plans.
- Put the kids to work so they can earn at least $7,000 each to invest in their Roth IRAs. The standard deduction limit for 2024 is $14,600
- Rebuild my stock market allocation given I sold stocks to buy a house. This means ~70% of savings will go to the S&P 500.
- Continue to diversify into private tech companies. I like the Innovation Fund, which invests in AI, modern data infrastructure, development operations, financial technology, and prop tech. Roughly 35% of the Innovation Fund is invested in artificial intelligence, which I’m excited about.
No matter what the various Wall Street forecasts, I will always take full advantage of tax-advantaged accounts. So should you. In addition, I will continue to build my taxable portfolio because there is no limit to contributions. It is your taxable portfolio that will take care of you in early retirement.
Subscribe To Financial Samurai
Listen and subscribe to The Financial Samurai podcast on Apple or Spotify. I interview experts in their respective fields and discuss some of the most interesting topics on this site. Please share, rate, and review.
For more nuanced personal finance content, join 60,000+ others and sign up for the free Financial Samurai newsletter. Financial Samurai is one of the largest independently-owned personal finance sites that started in 2009.
Financial Samurai is an investor in Fundrise and is also sponsored by them.
