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Fundstrat’s Tom Lee had the most accurate stock market outlook for 2023, while almost everyone else was bearish.
A year ago, he said the S&P 500 would end 2023 at 4,750, which is within 1% of its current level.
Here’s what he expects the stock market will do in 2024.
Fundstrat’s Tom Lee raised plenty of eyebrows this time a year ago when he forecasted that the S&P 500 would soar more than 20% in 2023 to end the year at 4,750.
Investors were still licking their wounds from a brutal bear market that lasted nearly all of 2022, and there were few indications that suggested a strong stock market recovery was imminent.
“US economy remarkably resilient in the face of rapid Fed hike cycle. The plurality of equity investors expect an inevitable recession as Fed hikes until it breaks something. But if above assessment [falling inflation, end of rate hikes] is correct, a ‘soft landing’ is the highest probability,” Lee said in his 2023 stock market outlook.
And that’s just what happened, with calls for a soft landing in the economy increasing as the Federal Reserve ended its interest rate hiking cycle thanks to falling inflation.
The S&P 500 has soared 25% in 2023 to its current level at about 4,785, which is within 1% of Lee’s initial 2023 price target. In fact, his forecast came the closest to predicting the S&P 500 among the strategists tracked by Bloomberg.
Lee, who was one of the few bulls on Wall Street last year, is once again expecting a solid year ahead for the stock market, with a S&P 500 price target of 5,200 for the end of 2024, representing potential upside of 9% from current levels.
Here’s what Lee expects to happen next year, according to his 2024 outlook released earlier this month.
The key driver
The easing of financial conditions throughout 2024 will be the key driver to further stock market gains, he said. The Fed has signaled that its next interest rate decision is more likely a cut than a hike, and the market is currently pricing in at least five 25-basis-point cuts next year.
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