Another Wall Street strategist sees record highs for the S&P 500 in 2024.
Oppenheimer chief investment strategist John Stoltzfus projects the S&P 500 (^GSPC) will close next year at 5,200, matching Fundstrat's Tom Lee for the highest target tracked by Yahoo Finance. The call reflects about 13% growth for the benchmark average over next year from Friday's close.
"The big story here from what we can see is it just looks like the US economy is bigger than the negative pitchbook of the bears," Stoltzfus told Yahoo Finance in a nod to economic data that has surprised to the upside throughout 2023.
Stoltzfus noted that Oppenheimer sees 2024 as a "year of transition" from a period of restrictive monetary policy by the Fed to a period of the central bank easing its stance.
"Resilience" will once again be the key word in 2024, he said. Stoltzfus doesn't see economic growth turning negative despite a slowdown and sees interest rate cuts bringing relief to markets in the second half of the year.
Positive trends seen in earnings over the last two quarters has Stoltzfus feeling confident corporates can hold up in 2024, too. He projects corporate earnings to grow by 9% in 2024 to earnings per share of $240.
"The fact eight of eleven sectors are showing positive earnings growth, with four of them — Communications Services, Information Technology, Consumer Discretionary and Financials — rising double digits, that's a wake up call," Stoltzfus said. "This is remarkable."
He sees many of the 2023 winners leading in 2024 again too. Oppenheimer has Information Technology (XLK) and Consumer Discretionary (XLY) rated as Overweight headed into 2024, along with Industrials (XLI).
Technology has been the leading sector in 2023, soaring 50%, while Consumer Discretionary has been the third-strongest sector, rising 34.1%.
"What we're really looking for here is a broadening of the rally," Stoltzfus said. "But it will likely not be at the expense of technology because technology remains the core driver ... Technology today is in a position parallel to where the automobile was in the early 20th century. "
Notably, Stoltzfus described recent market moves projecting Fed rate cuts as soon as March as "too rosy." While noting the Fed wants to avoid tipping the economy into recession, he believes it will be cautious in ensuring inflation's downward trend continues.
He sees rate cuts coming in the second half of next year and maybe even in the fourth quarter if inflation proves to be "stickier."
"We're no longer in a crisis situation," Stoltzfus said. "This is not to say that the Fed would not cut rates if we go into crisis situation or if it feels that the economy is falling into recession. They might very well cut rates.
"But we don't think that's the case. We think that the consumer and business remain remarkably resilient. Labor remains resilient even though the jobs numbers are beginning to come down."
Josh Schafer is a reporter for Yahoo Finance.
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