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Expect a stock market pullback in early 2024 for these 4 reasons, Fundstrat says

Expect a stock market pullback in early 2024 for these 4 reasons, Fundstrat says


Stocks aren’t exhibiting late-cycle behavior, said Fundstrat’s Tom Lee.Brendan McDermid/Reuters

  • Fundstrat’s Tom Lee is bullish on the stock market in 2024, but he doesn’t expect stocks to rise in a straight line.

  • Lee warned that the stock market is expected to see a sell-off in the first quarter of 2024.

  • These are the 4 reasons why Lee expects the stock markets to decline in the coming months.


Tom Lee of Fundstrat is one of Wall Street’s most optimistic strategists for 2024, but he doesn’t expect the stock market to rise in a straight line.

Lee warned clients in a note Friday that the stock market is expected to see a sell-off in the early months of 2024.

To be clear, Lee expects that S&P500 is expected to hit an all-time high during the month of January, and he expects the stock market’s gains to continue over the next year, with a year-end 2024 S&P 500 price target of 5,200.

“Reaching an all-time high is a big milestone for the market. And stocks don’t suddenly reverse from there,” Lee said.

But the stock market hitting record highs in January will likely soon be followed by a pullback of around 5% in February or March, representing a period of consolidation for the stock market after rallying 16% since late October .

“In the current environment, we could see the S&P 500 in the 4,400 to 4,500 range once we hit all-time highs, or a modest pullback,” Lee warned. “This is consistent with our full-year 2024 outlook, whereby our base case scenario is that the S&P 500 realizes the bulk of its gains in the second half of 2024.”

Lee offered the following four reasons why he expects stocks to see a pullback after January.

1. The market could outpace the Federal Reserve in terms of lowering interest rates. While the Fed only expects three interest rate cuts in 2024, the market is currently pricing in six interest rate cuts next year. Any decline in expectations for how many times the Fed will cut interest rates next year could lead to downward volatility in stocks.

2. “The AI ​​timeline could be pushed back due to ‘systematic hacking’ by malicious AI,” Lee said.

3. “Stock markets need to consolidate the parabolic gains of late 2023,” Lee said.

4. “A pullback in the February/March period is consistent with seasonal election year results,” Lee said.

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Strategic Fund

Any decline in the stock market next year should ultimately be bought, Fundstrat says, as technical strategist Mark Newton said in a note last week that trillions of dollars of cash on the sidelines should provide enough firepower to make stock declines short-lived.

Read the original article on Business Insider



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