Are we entering a bull market in 2024?
Key Takeaways. Potential economic obstacles in 2024 could delay the start of a sustained bull market, but investors can still find opportunities. Consider staying cautious on U.S. stocks while shifting to bonds for potential income and capital gains.
With stock indexes at all-time highs, it seems we are in the midst of a new bull market. While much of the market's recent gains have come from a handful of stocks, the rally has begun to broaden in recent months. Expectations of an earnings rebound in 2024 suggest earnings could continue to drive the market higher.
The Stock Market Rally Has Wall Street Bullish on 2024. The Second Half Could Change That. The stock market rally this year has defied predictions. The second half of the year can either validate the market's optimism—or ruin it.
The market sees a greater than 80% chance of at least five rate cuts from current levels by the end of 2024. Investor optimism about the economic outlook has improved dramatically from a year ago, but there's still a risk that Fed policy tightening could tip the economy into a recession in 2024.
| S.No. | Company | Industry/Sector |
|---|---|---|
| 1. | Tata Consultancy Services Ltd | IT - Software |
| 2. | Infosys Ltd | IT - Software |
| 3. | Hindustan Unilever Ltd | FMCG |
| 4. | Reliance Industries Ltd | Refineries |
But the early days of 2024 swept away this uncertainty as the S&P 500 reached its highest level ever, signaling we've been in bull territory for quite a while -- since the index started rebounding from its bear market low in late 2022.
When did the bull market start? The current bull market started in October 2022, when the S&P 500 reached its most recent low. Since then, the index has swelled about 35 percent.
Large-cap stocks continue to dominate
Large-cap stocks, such as those represented in the S&P 500 Index, are off to a solid start in 2024. Along with information technology and communication services stocks, other sectors such as financial, health care, industrial, and energy stocks are generating solid results.
Bulls go bigger — Both bull and bear markets are normal and common. The S&P 500 Index has experienced 27 of each since 1928 (FIGURE 1), although bulls have tended to be stronger and longer. On average, bull markets have gained 115% over 2.7 years while bear markets have lost 35% and lasted less than a year.
The updated Dow Jones price prediction for the next 5 years is for the index to trade around 45,000 points. Long Forecast predicts Dow Jones to trade at 39071 points in the first month of 2024 and and advance up to 48,000 points by the end of the year.
What is the gold forecast for 2024?
This positive trend has raised expectations about the gold price forecast for 2024. Analysts and traders widely believe that gold prices will touch ₹ 70,000 this year. While it may be possible, it is essential to make a realistic assessment of the prevailing conditions.
"2024 is bound to be a better year for homebuyers, if only because of how terrible 2023 was," says John Graff, CEO at Ashby & Graff Real Estate.
The S&P 500 still has 30% upside between now and the end of 2025, according to Capital Economics. "Our end-2025 forecast of 6,500 for the index is premised on its valuation reaching a similar level to its peak during the dot com mania," Capital Economics said.
- Alphabet.
- Amazon.com.
- Apple.
- Meta Platforms.
- Microsoft.
- Nvidia.
- Tesla.
- Broadcom Inc. (NASDAQ:AVGO)
- Eli Lilly and Company (NYSE:LLY)
- JPMorgan Chase & Co. (NYSE:JPM)
- Berkshire Hathaway Inc. (NYSE:BRK-B)
- Apple Inc. (NASDAQ:AAPL)
- Visa Inc. (NYSE:V)
- Alphabet Inc. (NASDAQ:GOOG)
Conventional wisdom holds that when you hit your 70s, you should adjust your investment portfolio so it leans heavily toward low-risk bonds and cash accounts and away from higher-risk stocks and mutual funds. That strategy still has merit, according to many financial advisors.
Key Takeaways. While holding or moving to cash might feel good mentally and help avoid short-term stock market volatility, it is unlikely to be wise over the long term. Once you cash out a stock that's dropped in price, you move from a paper loss to an actual loss.
How long do bull markets usually last? Historically speaking, the average length of a bull market is 9.6 months. The average gain for a bull market is 112%.
A bull market occurs when securities are on the rise, while a bear market occurs when securities fall for a sustained period of time. It's important to understand the differences between bull and bear markets and how they impact your investment decisions.
Economic downturn or recession
However, economic indicators can change, and if there are signs of an economic downturn or recession, it can trigger a reversal in market sentiment. Factors such as slowing economic growth, rising inflation, or geopolitical tensions can contribute to the end of a bull run.
How long do bear markets last?
The duration of bear markets can vary, but on average, they last approximately 289 days, equivalent to around nine and a half months. It's important to note that there's no way to predict the timing of a bear market with complete certainty, and history shows that the average bear market length can vary significantly.
In 2024, that means communication services, information technology and financials, as the best performers, are on their way to good things for the remaining 10 months. Meanwhile, the tail-end trio that will keep on with their losing ways are materials, utilities and real estate.
The strong start could set up the stock market for a solid 2024, when considering almost 75 years of data.
The shift up in portfolio returns reflects a 7.4% expected annualized return for U.S. stocks in the next 10 years, up from the 6.5% assumption made last year.
The longest bear market spanned 61 months from 1937 to 1942 during the Great Depression. Bull markets tend to last longer than bear markets with an average duration of 6.6 years.
