S&P 500: All-Time Highs on the Horizon for 2024 Despite Heightened Macro Risks
Despite the negative forecasts for equity markets at the beginning of 2023, the year has unfolded more favorably, defying the pessimistic scenario. Most indexes have demonstrated robust positive performance since January, with Nasdaq standing out with an impressive +36% gain so far.
Looking ahead to the next year, the forecasts indicate the bull market is likely to continue, potentially culminating in a rally toward all-time highs for stock indexes. But this scenario's probability hinges on avoiding a deep recession, a prospect that is not assured, especially in Europe, where the Eurozone is precariously poised on the brink of economic growth.
In the Eurozone, the data speak for themselves, clearly signaling an impending recession. Conversely, in the US, the latest GDP data showing a quarter-on-quarter growth of 4.9% significantly dismisses the recessionary scenario.
However, delving into other indicators related to economic growth paints a less optimistic picture. Notably, two indicators stand out: industrial production and manufacturing PMI, which have consistently lingered below the recession threshold for several months.
If we add to this the persistently inverted yield curve of US Treasury securities, the specter of recession in the United States still exists. Therefore, investors' attention should be focused this week on the next GDP and PMI readings, which will be published on Wednesday and Friday, respectively.
If GDP dynamics continue at relatively high levels along with continued disinflation, the stock market may not have an argument to make a deeper discount and continue to move northward.
Despite the conservative statements of Federal Reserve officials, who avoid clear statements as to the first interest
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