Why the Stock Market Could Keep Rallying Despite Mounting Geopolitical Risks

investing.com:

As we approach the close of 2023, market sentiment points toward a bullish 2024 for stocks. The year-over-year expected stock market earnings growth rate is expected at 8.1%, according to FactSet.

Despite various uncertainties throughout 2023, the most effective strategy proved to be buying without excessive contemplation.

Factors such as the ones listed below were the primary sentiment drivers:

While technology stocks, particularly the Magnificent 7, significantly contributed to the stock market's upswing, the broader market also experienced a positive year.

Before Thanksgiving, approximately 90% of S&P 500 stocks were above their 20-day moving averages—a positive sign for breadth momentum, indicating a high percentage of stocks moving upward.

A healthy market rises with the support of many bullish stocks, not just a select few.

Although the S&P 500 trades at 19 times expected 2024 earnings according to FactSet, indications suggest Wall Street's upward trajectory will persist.

Anticipated interest rate cuts and favorable company earnings forecasts, potentially reaching +8-10%, contribute to this outlook.

The robust labor market and rising wages further support expectations of sustained consumption, accounting for 65% of the country's GDP.

Historically, years with S&P 500 rallies exceeding 20% are seldom followed by similar performances. Out of 26 years with at least one +20% rally, only nine featured consecutive gains of that magnitude.

Even if a market downturn occurs early in 2024, it's likely to be short-lived. The more probable scenario involves a pullback alleviating near-term excesses, setting the stage for another bull market stretch in 2024.

Reasons for confidence in continued bullishness include:

Additionally,