After a bull market in 2023, let's look at the 2024 Wall Street forecasts for the S&P 500. Overall, the 2024 S&P 500 targets range from 4,200 to 5,500.
Obviously, anything can happen over the course of a year. Plenty of economic data and corporate events will happen through 2024 that will make Wall Street strategists continuously change their forecasts.
Before we review the 2024 forecasts, let's review which Wall Street firms came closest and farthest for 2023. I'll also review my target.
Note: If you're bullish on the stock market in 2024, I'd invest in private growth companies that got beaten up since 2022. With risk-on back, private companies will likely gain momentum again.
Worst 2023 Wall Street Forecasts For The S&P 500
Based on the S&P 500 at 4,559, the following Wall Street firms had the worst calls from their initial 2023 forecasts:
Barclays (3,675), Société Generale (3,800), Morgan Stanley (3,900), UBS (3,900), Citi (3,900), Blackrock (3,930), Bank of America (4,000), Goldman Sachs (4,000)
My favorite bearish Wall Street strategist was Mike Wilson, continuously pounding the table that the S&P 500 would drop to 3,200 in 2023 before ending at 3,900. Despite being so wrong, Mike will probably still get a nice bonus because he gained a lot of publicity.
Best 2023 Wall Street Forecasts For The S&P 500
Based on the S&P 500 at 4,559, the following Wall Street firms had the best calls from their initial 2023 forecasts:
Oppenheimer (4,400), Deutsche Bank (4,500), Fundstrat (4,750), Yardeni Research (4,800).
The following were close:,JP Morgan (4,200), Jefferies (4,200), Wells Fargo (4,200), RBC Capital Markets (4,200), BMO (4,300), Nuveen (4,300).
Well done strategists from the above firms. I hope you get big year-end bonuses!
Financial Samurai Reader Forecasts For The S&P 500
From 1,968 survey entries, the winning forecast were for the S&P 500 to close between 4,001 – 4,250 in 2023 (31%), followed by 3,751 – 4,000 (24%). For reference, the S&P 500 started 2023 at 3,824, so we were mostly neutral-to-bullish.
Here's what I wrote at the end of 2022 for 2023. Half the battle is getting the direction right because your belief will make you invest or not.
I would love to believe Deutsche Bank's 4,500 S&P 500 price target for 2023. If we do indeed get to 4,500 in 1H 2023, I will likely reduce my public equity exposure from 30% to 20% of my net worth. It will feel like a win to claw back most of the losses from 2022.
But I feel like the S&P 500 is going to be range-bound between 3,800 – 4,250, with a target price of 4,100 if I had to choose. The reasons include earnings declines, a stubborn Fed that wants to see millions unemployed, a recession, and skepticism about valuations. With the Fed still driving a bus with its engine on fire, it's hard to know how much to pay for stocks.
Things looked dicey in October 2023 as the S&P 500 corrected by 10% back down to 4,117, but now we're back to good times and I feel lucky. The rebound to almost 4,750 feels like another chance at life!
2024 Wall Street Forecasts For The S&P 500 (Stock Market)
Now onto the 2024 S&P 500 forecasts. The average Wall Street forecasts calls for 4,861 for the S&P 500 by the end of 2024. Given the huge year-end rally in 2023, there's not much upside left.
Most Bearish 2024 Wall Street S&P 500 Forecast: JPM
JPMorgan: 4,200, $225 EPS (as of Nov. 29) “With a stepdown in economic growth next year (US growth to slow to 0.7% YoY by 4Q24 from 2.8% 4Q23), eroding household excess savings and liquidity, and tightening credit, we see 2024 consensus hockey-stick EPS growth of 11% as unrealistic… Negative corporate sentiment should be a catalyst for sharply lower estimates early next year.“
Neutral 2024 Wall Street S&P 500 Forecasts: MS, UBS, Wells Fargo,
Morgan Stanley: 4,500, $229 EPS (as of Nov. 13, 2023) “Near-term uncertainty should give way to an earnings recovery… Our 2024 EPS estimate [of $229] is consistent with output from our leading earnings models, which show a recovery in growth next year as well as our economists' expectations for growth next year… 2025 represents a strong earnings growth environment (+16%Y) as positive operating leverage and tech-driven productivity growth (artificial intelligence) lead to margin expansion. On the valuation front, we forecast a 17.0x forward P/E multiple at the end of next year (20-year average P/E is 15.6x; currently 18.1x).“ MS strategist Mike Wilson must have been replaced!
UBS: 4,600, $228 EPS (as of Nov. 8, 2023) “Our 2024 target is based on a YE 2024E multiple of 18.5x (a -0.7x multiple point contraction) applied to 2025E EPS of $249. While UBS anticipates a steep decline in yields over this period, higher equity risk premiums should offset this benefit.“
Wells Fargo: 4,625, $235 EPS (as of Nov. 27, 2023) “With VIX low, credit spreads tight, equities rallying, and cost of capital higher/volatile, it's time to downshift. Expect a volatile and ultimately flattish SPX in 2024 (4625), as valuation limits upside and rate uncertainty elevates downside risk.“
Slightly Positive 2024 Wall Street S&P 500 Forecasts: GS, SG, Barclays
Goldman Sachs: 4,700, $237 EPS (as of Nov. 15, 2023) “Our baseline assumption during the next year is the U.S. economy continues to expand at a modest pace and avoids a recession, earnings rise by 5%, and the valuation of the equity market equals 18x, close to the current P/E level. Our forecast falls slightly below the typical 8% return during presidential election years.“
However, on Dec 17, GS raised its TP to 5,100. “Decelerating inflation and Fed easing will keep real yields low and support a P/E multiple greater than 19x. Since late October, S&P 500 has surged by 15% and Russell 2000 has soared by 23% as real rates plummeted from 2.5% to 1.7%. Our prior year-end 2024 forecast assumed yields of 2.3% and a P/E of 18x. Upside risk exists to our above-consensus EPS estimate of 5% growth. The improved macro outlook implies a more conducive environment for bringing IPOs to market. Resilient growth and falling rates should benefit stocks with weaker balance sheets, particularly those that are sensitive to economic growth.”
Societe Generale: 4,750, $230 EPS (as of Nov. 20, 2023) “The S&P 500 should be in ‘buy-the-dip’ territory, as leading indicators for profits continue to improve. Yet, the journey to the end of the year should be far from smooth, as we expect a mild recession in the middle of the year, a credit market sell-off in 2Q and ongoing quantitative tightening.“
Barclays: 4,800, $233 (as of Nov. 28, 2023) “Whether ‘new normal’ or ‘old,’ a roller coaster 2023 proved that this cycle is anything but. We expect US equities to deliver single-digit returns next year as easing inflation is offset by modest economic deceleration.“
Bullish 2024 Wall Street S&P 500 Forecasts: BoA, RBC, DB,
Bank of America: 5,000, $235 EPS (as of Nov. 21, 2023) “The equity risk premium could fall further, especially ex-Tech: we are past maximum macro uncertainty. The market has absorbed significant geopolitical shocks already and the good news is we’re talking about the bad news. Macro signals are muddled, but idiosyncratic alpha increased this year. We’re bullish not because we expect the Fed to cut, but because of what the Fed has accomplished. Companies have adapted (as they are wont to do) to higher rates and inflation.“
RBC: 5,000, $232 EPS (as of Nov. 22, 2023) “While the November rally has likely pulled forward some of 2024’s gains, we remain constructive on the U.S. equity market in the year ahead. Our valuation and sentiment work are sending constructive signals, partially offset by headwinds from a sluggish economy and uncertainty around the 2024 Presidential election. Our work also suggests that the greater appeal of bonds may end up being a dampener of US equity market returns but not necessarily a derailer of them.“
Deutsche Bank: 5,100, $250 (as of Nov. 27, 2023) “Are valuations high? We don’t think so. If inflation returns to 2%, as economists forecast and is priced in across asset classes, while payout ratios remain elevated, fair value in our reading is 18x, with a range of 16x-20x, which they have been in for the last 2 years. If earnings growth continues to recover as we forecast, valuations will remain well supported.“
Most Bullish 2024 Wall Street S&P 500 Forecasts: BMO, Capital Economics
BMO: 5,100, $250 EPS (as of Nov. 27, 2023) “[W]e believe U.S. stocks will attain another year of positive returns in 2024, albeit while demonstrating more sanguine, broadly distributed, and fundamentally defined performance relative to the last decade or so. In other words, normal and typical.“
Fundstrat: 5,200 $265 EPS (as of December 8, 2023): Tom Lee, Head of Research Fundstrat was one of the most bullish strategists in 2023 with a 4,750 price target. He's been right, but was also wrong in 2022 when he thought the market would go up (-19.6%). Tom believes the breadth of gains will grow beyond big cap tech names. Believes the Fed Funds rate is going to 3.25% from 5.25% today.
Capital Economics: 5,500 (as of Dec. 1, 2023) “Still time for the S&P 500 to party like it’s 1999 …it has come a long way lately, thanks both to a rise in its valuation and to an increase in expectations for future earnings. …This partly reflects investors’ enthusiasm about AI technology. …if AI enthusiasm is inflating a bubble in the S&P 500, it’s one that is still in its early stages. We think the index could therefore make further gains: our end-2024 forecast is 5,500, ~20% above its current level.“
Positive On The Stock Market For 2024
Which 2024 S&P 500 price target do you agree with and why?
Personally, I'm bullish on the stock market for 2024 due to the following reasons:
- The Fed will start cutting rates by mid-2024, making borrowing costs cheaper
- The bond market will continue rallying in anticipation of growing rate cuts and declining inflation
- Lower rates make risk assets more attractive
- Inflation will unlikely experience an aggressive rebound like the 1970s
- Pent-up cash saved in money markets and Treasury bonds will find its way back into risk assets
- Any recession that comes will be mild and not cause a greater than 1-2% increase in the unemployment rate
- Corporate earnings are still expected to grow despite lackluster GDP growth forecasts
- Consumer spending is expected to shift back toward goods from services, and the S&P 500 has greater exposure to the goods sector
- The housing market will experience strengthening, which will boost consumer sentiment, spending, and household net worth
All this to say my year-end 2024 S&P 500 price target is 4,869. We're talking about 19.8X 2024 P/E EPS if EPS grows to $246. Sounds expensive, but by 2H2024, Wall Street will be looking for 2025 EPS numbers, which could grow to $260 or more.
After the year-end rally, Treasury bonds currently yielding 4.5%+ look attractive again! How ironic. But I expect the 10-year Treasury bond yield to fall to 3.75% or lower by 3Q 2024.
Upper Limit To The S&P 500 For 2024
With growing confidence the Fed will eventually pivot, there's a chance of a return of mania in small caps, meme stocks, and startup valuations. I can easily see the biggest underperformers of 2023 outperforming the most in 2024 due to declining interest rates. There may be a rotation out of the Magnificent 7 mega-cap tech stocks to the “lowest quality” names.
The return of FOMO investing during an election year may push the S&P 500 to an upper limit of 5,243, or 15% from 4,559. As a result, I'm going to keep on investing in venture capital funds that invest in AI. I don't have the time or risk-tolerance to actively trade small caps and meme stocks.
Lower Limit To The S&P 500 For 2024
On the downside, the S&P 500 could easily retreat to 4,200 (-7.9%) if the Fed delays cutting rates because inflation doesn't go down as much as expected. The year-end 2023 rally has brought forward a lot of gains and expectations. As a result, earnings may disappoint. Commercial office debt could also cause more regional banks to blow up.
Below is a great chart from Bank of America Research highlighting how the S&P 500 return historically declines after the first Fed cut. The idea being that a recession overwhelms the positive benefits of lower interest rates.
Given the Fed tends to be late hiking rates and cutting rates, by the time the Fed starts cutting rates the economy may already be in trouble. That said, this is the most anticipated recession in history. So if one does happen, maybe it won't be so bad.
No Bear Market In 2024
Overall, I think 2024 will be a decent year for stocks, real estate, and other risk assets. I doubt we'll make another 20% in stocks just like I doubt there will be another bear market. Boring but slightly up is good!
I also see an asset class rotation from stocks into residential real estate, given the lag in price performance as well as pent-up demand. Investors are always hunting for the highest returns, no matter the asset class. Meanwhile, the richer you feel from stocks, the more money gets converted into real estate.
If 2023 taught us anything, it's to stay invested for the long term. Just don't forget to sell occasionally when you've made enough to buy what you want!
Loading ...I'd love to know your forecast for the S&P 500 in 2024 and why. I'll be updating this post every quarter based on new data.
How I Plan To Invest In Stocks In 2024
For now, here's how I plan to invest in stocks and bonds for 2024. My thoughts will most certainly change over the year.
- Max out my tax-advantaged retirement accounts (SEP IRA, Solo 401(k)). Employees can contribute $23,000 pre-tax to their 401(k)s in 2024.
- Contribute the gift-tax limit maximum of $17,000 to each of my kids' 529 plans.
- Put the kids to work so they can earn at least $7,000 each to invest in their Roth IRAs. The standard deduction limit for 2024 is $14,600
- Rebuild my stock market allocation given I sold stocks to buy a house. This means ~70% of savings will go to the S&P 500.
- Continue to diversify into private tech companies. I like the Innovation Fund, which invests in AI, modern data infrastructure, development operations, financial technology, and prop tech. Roughly 35% of the Innovation Fund is invested in artificial intelligence, which I'm excited about.
No matter what the various Wall Street forecasts, I will always take full advantage of tax-advantaged accounts. So should you. In addition, I will continue to build my taxable portfolio because there is no limit to contributions. It is your taxable portfolio that will take care of you in early retirement.
Subscribe To Financial Samurai
Listen and subscribe to The Financial Samurai podcast on Apple or Spotify. I interview experts in their respective fields and discuss some of the most interesting topics on this site. Please share, rate, and review.
For more nuanced personal finance content, join 60,000+ others and sign up for the free Financial Samurai newsletter. Financial Samurai is one of the largest independently-owned personal finance sites that started in 2009.
Financial Samurai is an investor in Fundrise and is also sponsored by them.
PERSONALLY, I would make 1 tweak to your 2024 plan.
Put your kids to work a little more. I would do it until they reach the limit of either the 10% or 12% income tax brackets.
Just make sure they are old enough and capable enough to earn that (I do not know their ages).
What to do with the excess over their Roth limit…plan old brokerage and let it grow UNTIL they are old enough to get a 401k at their first job (even in the teenager working in fast food or retail) at mid size or larger company. THEN they sell off their brokerage assets (pay a small cap gains) and reinvest those funds into a Roth 401k (they have become pretty common).
OR use those funds to cover the HIGH expenses of older teens (cars, car insurance, trips for travel teams, apartments when they are done dorming and so on).
Usually…I would advise to reinvest/spend that money before you first fill out your kids FAFSA….but your kids likely wont get much or any need based financial aid (funds in the kids brokerage will be accounted for on FAFSA).
Sounds good. It is my plan for when they are older. My oldest is not yet 7.
It’s great the standard deduction for singles is $14,600 in 2024. It’s a no brainer to work enough to make that amount of money and pay no taxes and contribute the max to the Roth IRA.
Related: Opening Up Roth IRA For Your Kids
So Sam
I think the S and P will be under 4200 in December 2024
I will bet you 5000k if you are interested?
JJ
Sure, I’ll bet $5,000 the S&P 500 closes above 4,200 on December 31, 2024 (year end). Loser donate’s to winner’s charity.
You don’t need to bet each other. You can take a bet directly with the market. 4200 Dec 24 puts are cheap!
All good. It’s fun!
2023 was a typical S&P 500 UP year. GIVEN that the S&P will be UP in 2024, the expected average return for all 70 UP years (out of all 96 years 1928 to 2023) is 20.7% (including dividends). So if S&P is only up single digits next year, that’s below the expected average for an UP year. Still better than being a DOWN year.
Also, S&P 500 maximum closing high was 4796.56 on Jan 3, 2022. That’s less than 200 points above Friday’s 4604.37 close.
Yes I would agree with being bullish for next year for various reasons which are quite well known. – interest rates likely to come down, more liquidity being pumped in to the system, election year. Also interesting to note the large amounts of money (5trn?) being parked in money market accounts which could very well flow into equities if short term rates start to some down.
Like Sam, I have young children and would like to open custodial Roth IRA accounts for them. However, how can a 9 year old and a 7 year old have “earned income” if the the FLSA sets 14 years of age as the minimum age for employment? If there is a work around on age, how do you report that “earned income” to the IRS when filing taxes? For context, I own and manage multiple rental properties and could find my children “a job” within the business, but is it legit? If anyone in the community knows the answer to this please educate me! Thanks.
This is a great question. Some children who are models (e.g. Geber Baby) and actors qualify since they have contracts, but other than that I think it’s pretty small number that qualify. I could certainly be wrong, so I’m looking forward to seeing who else replies and their justifications.
What will you be buying in the S&P 500? Specific stocks or which funds?
SP 500 ETF I am actively putting money into venture capital to invest in private artificial intelligence companies.
I don’t call this a bull run yet. We are still what 400 points lower then the high in 2022…. If I gave you $5 and then took away $2 and then gave $1 back – you would have $4 – that is not really good. When we are 10% above our ATH then you say bull again
It’s all relative to the starting point. Bull run from October 2022 for sure. Back to even from the start of 2022.
Personally, I feel great we’ve rebounded so much.
Less than 300 points from the high in Dec 2021, not 400.
Wow this is music to my ears. I’m so glad that to hear that most forecasts are positive for 2024 or at least neutral. At the beginning of 2023, I really thought this year would be much worse with 2024 even more dicey. I still plan to be cautious with my spending because I’m in savings mode through the holidays and at least half of first quarter. If the stock market can trend upward simultaneously, I’ll be thrilled.
Great review but still 4 weeks to go till the end of the year. If there’s a significant change I hope you send an update after the market closes for the year.
Thanks Sam! I agree with your forecast as well.
As an aside, with your experience in finance, I would love to here your thoughts/experience on the inner workings on the “analysts” at these firms that publish the forecasts. Does anybody who knows anything about money and investing actually listen? So many of these “pros” are so wrong every year. Are they paid mostly to garner publicity for the firm? Be outlandish and get on CNBC? Are they ever held at all accountable for actual results? Does the investment branch of the firm actually act on the analysts projections, or are the traders and wealth account managers just doing their own thing and the “analysts” is the publicity face? How do they actually come up with the forecast? Is it all algorithms so basically they just hide behind that when wrong? But wouldn’t they all have basically the same algos and same general data input so why so disparate projections between firms? Just so amazed at how many words they say in interviews but how little substance there is. If I am an analyst at GS, and I get my projections for S&P off by 20% three years in a row, will there be any consequences (firing or less bonus?).
Yeah, I wanna know this, too!
Best job on Wall Street is being a Strategist! The second best job on Wall Street is being an Economist. Even if you’re dead wrong, you’ll still get paid. And if you get a lot of institutional investor votes and media coverage, you might get paid even more, even if you are wrong.
The thing I LIKE about bayside clients is: at the end of the day, what they invest in and how much is their own decision. They don’t put the blame on anybody else. One of the investor’s goals is to UNCOVER BLINDSPOTS by hearing as many different points of view.
Since all investors have been wrong before and will be wrong again, we must always be diligent and humble.
For example, I like Mike Wilson’s ultra-bearish view b/c it could happen. I don’t want to be caught in a thunderstorm w/out an umbrella.
FS, my prediction is 5000-5200. Election year, average over time, lower interest rates (somewhat nominal with QT), and a catchup of all the rest of the stocks that aren’t tech will result in a higher outcome.
And if I’m wrong, well I’m in for a penny already..
But I am interested in the private equity route. Definitely seems like an extreme barbelling of investments for diversification and maximizing outcomes. As always, thanks for the insight,