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As we enter 2024, Tom Lee of Fundstrat presents a mixed forecast for the stock market. While he remains optimistic about the overall performance, he signals potential disturbances early in the year.
What Happened: Lee projects a significant rise in the S&P 500, expecting it to hit new heights in January and sustain growth throughout the year, with an ambitious target of 5,200 by year-end. However, he cautions about a likely downturn of approximately 5% around February or March.
This expected dip is seen as a period of adjustment after the market's recent upswing. Markets Insider reports.
“In the current context, we could see S&P 500 4,400 to 4,500 once we make all-time highs or a modest pullback,” Lee told the outlet.
"This is consistent with our 2024 Year Ahead Outlook, where our base case is the S&P 500 makes most of its gains in [the] second half of 2024," he added.
Lee identifies four key factors behind this anticipated early-year pullback. The primary concern is the disparity between the market's anticipation of six interest rate cuts and the Federal Reserve's projection of just three.
Also Read: Wall Street Braces For 2024 Recession: Economic Growth To Slow, Markets To Rise, Say Bullish Firms
Additionally, Lee points to potential disruptions in AI development due to security threats. He also notes the necessity for the equity markets to stabilize after their rapid ascent in late 2023, according to Market Insider.
Finally, he references the typical pattern of stock market downturns in the early months of election years.
Despite these looming challenges, Fundstrat views any early 2024 market dips as buying opportunities.
According to Fundstrat's technical strategist, Mark Newton, investors' substantial cash reserves are expected to cushion the market, making any downturns brief and potentially lucrative for buyers, Market Insider reports.
For traders interested in engaging with S&P 500 trends in 2024, ETFs such as SPDR S&P 500 ETF Trust (NYSE:SPY) and Vanguard Total Stock Market ETF (NYSE:VTI) could be impacted by these market dynamics.
Now Read: From Bearish To Bullish: Major Analysts Predict US Stock Market's Performance In 2024
This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo: Shutterstock
