Market could hit 'all-time highs by June' in 2024: Strategist
The U.S. economy keeps pushing back against forecasts predicting a recession would hit in 2023. Now, investors are left wondering what this means looking ahead to 2024. J.P. Morgan Private Bank U.S. Equity Strategist Abby Yoder joins Yahoo Finance to discuss JPMorgan's recent upgrade in the consumer discretionary sector and the outlook for the S&P 500 (^GSPC) over the next year.
"We have this concept of what we've been calling a rolling earnings recession, it's where different sectors of the S&P 500 have gone through their earnings recessions at different times," Yoder explains the reasoning behind the bullish outlook. The consumer discretionary sector "[has] already been through that earnings recession period... They've had margin support in the fact that they already cut costs, thats why we are more positive on the consumer discretionary sector."
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Video Transcript
- I mean, how difficult is it just trying to gauge the best investment opportunities where we're headed next given all the uncertainties, given the fact that we've heard time and time again that this scenario is playing out right now, it's unlike anything really that we've seen in the past?
ABBY YODER: Yeah, I mean, this year is just kind of like emblematic of that, right? Coming into the year, 100% of economists thought we were going to be in a recession, 100%. And it's still very high, right? I think that's very much up for debate, where the economy is going.
But I think having a balanced approach in terms of your equities-- like growth and value, you've seen a huge swing over the past two years. If you just own them both over the same time period or over longer periods, it ends up working out, right?
I think right now, like I said, we are much more optimistic in terms of our equity outlook. We foresee the market hitting all-time highs-- or new all-time highs by June of next year. And all of that's driven by earnings, right? It's all fundamental in nature. And so when we're thinking about what we want exposure to, it does tend to be those more cyclically-oriented parts of the market, so consumer discretionary, for example.
- Yeah, and that goes to how far out markets are often looking as well here. When you think about how far that is, and you already think about June of next year, what would be the top idea-- let's say 2023 is done. 2024, what is the top idea that your team is already evaluating, that's already brewing right now?
ABBY YODER: We just upgraded consumer discretionary this past month. And I think it's really actually very controversial because you have all of these bears coming out saying that the consumer is slowing, which we do agree with. It's slowing but from very, very fast, from very high levels.
And the way that we think about it is we have this concept of what we've been calling a rolling earnings recession. It's where different sectors of the S&P 500 have gone through their earnings recessions at different times, right? And it has to do with the pandemic-- supply chain disruptions, different lockdowns happening, the shift from consumer goods to consumer services.
And so what we've already seen in the consumer discretionary sector, particularly on an equal weighted basis because that there are two companies that make up a large part of that, it's actually already been through that earnings recession period. And so you're starting to see they've already done cost cutting initiatives, and so thinking about that, a reacceleration on the top line but also having margin. They've had margin support. And the fact that they've already cut costs, that's why we're more positive on the consumer discretionary sector.
- Abby, great to have you here in studio with us. Thanks for coming out to Times Square. "Yahoo Finance Live" here this morning, Abby Yoder, JP Morgan Private Bank US equity strategist, joining us live in living color. Thanks.
ABBY YODER: Thank you.
