January 2024 Newsletter

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Read January 2024 Market Insights

There are many factors that impact stock market returns, but one common concern of investors is how the stock market will be impacted by a change in America’s President. In past election years, the S&P 500 Index has seen more positive performance than negative. Below we take a look at S&P 500 Index performance during presidential election years, which have historically provided positive gains for stocks.

Analysts are generally optimistic about the outlook for 2024, but an environment of slowing economic growth and historically high-interest rates is more difficult for some types of stocks than others.

Wall Street analysts are projecting S&P 500 earnings growth will rebound from just 1.1% in 2023 to 8.6% in the first quarter of 2024 and 12.2% for the full year. On the revenue front, analysts are calling for growth to jump from 2.4% in 2023 to 4.7% in the first quarter and 5.6% for the full year in 2024.

The current consensus 12-month price target for the S&P 500 is 5,148. If the S&P 500 hits that target in 2024, it will exceed its current all-time high of 4,796 from January 2022.

Based on average analyst estimates, the real estate sector has the most potential upside over the next 12 months at 25.3% followed closely by the consumer discretionary sector at 24.8%. The energy sector has the lowest expected upside at just 7.3%.

However, just because the energy sector may take a breather in 2024 doesn’t mean analysts are bearish on energy stocks as long-term investments. The energy sector currently has the highest percentage of analyst “buy” ratings of any sector at 64%. The consumer staples sector has the lowest percentage of “buy” ratings at 45%.

The high-flying technology sector is likely to get a lot of attention from investors in 2024 as the debate rages between tech sector bulls focused on long-term growth and bears focused on valuation. The technology sector’s forward earnings multiple of 24.2 is currently the highest of any sector, while the energy and financial sectors have the lowest forward earnings multiples at 12 and 13.2, respectively.