Should I invest in the S&P 500 in 2024?
Despite concerns about a possible recession, analysts expect the S&P 500 to report double-digit earnings growth in CY 2024. The estimated (year-over-year) earnings growth rate for CY 2024 is 11.7%, which is above the trailing 10-year average (annual) earnings growth rate of 8.4% (2013 – 2022).
Analysts expect overall S&P 500 earnings to rise 9.5% in 2024 after increasing around 4% in 2023, LSEG data showed.
While it's unclear whether prices will continue soaring, many people are hopeful that we're in the early stages of a new bull market. If that's the case, 2024 could be a great year for the stock market. But some investors are also worried that this is only a temporary rally before another downturn hits.
Economic growth actually accelerated above its 10-year average in 2023. That resilience, coupled with a fascination about artificial intelligence (AI), changed investors' collective mood. The S&P 500 soared throughout the year and finally reached a new high in January 2024, making the new bull market official.
By investing now and staying invested for as long as possible, you can rest easier knowing you're likely to see positive long-term returns -- no matter what happens in the coming weeks or months. Katie Brockman has positions in Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF.
First, Wall Street analysts expect S&P 500 revenue and earnings growth to accelerate in 2024. That could energize investors and move the index higher. Indeed, analysts believe that will happen. The S&P 500 has a median 12-month price target of 5,090, which implies about 8% upside from its current level.
As for how the stocks will perform in the coming election year, 2024 forecasts for the S&P 500 vary widely, but the consensus seems to fall in the range of 8%-9% gains, a little under the index's historical average of about 10%.
S&P 500 could hit 6,500 by end-2025, says Capital Economics.
| Stock | 2024 performance through Jan. 31 close |
|---|---|
| Super Micro Computer Inc. (SMCI) | 86.3% |
| Kaman Corp. (KAMN) | 88.1% |
| Ambrx Biopharma Inc. (AMAM) | 95.2% |
| Digital World Acquisition Corp. (DWAC) | 116.9% |
Some of the best stocks to invest in 2024 for beginners include Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Mastercard Incorporated (NYSE:MA). For this list, we used a stock screener and selected stable companies with high single digit or low-teens revenue growth.
Will there be a market crash in 2024?
"Some traders predict a flat or down market in the first half of 2024 due to high inflation, recession fears and rate hikes from the Fed. However, others foresee a bull market continuing, citing potential Fed rate cuts, earnings growth and historical trends around election years."
As a whole, analysts are optimistic about the outlook for stock prices in 2024. The consensus analyst price target for the S&P 500 is 5,090, suggesting roughly 8.5% upside from current levels.
Wall Street analysts are expecting earnings to rebound in the first half of 2024, projecting a 4.6% increase in S&P 500 earnings in the first quarter and another 9.4% growth in the second quarter.
The index itself has a long history of earning positive returns over time and recovering from downturns. While there are never any guarantees when it comes to investing, opting for an S&P 500 index fund or ETF is about as close to guaranteed long-term returns as you can get.
Analysts expect overall S&P 500 earnings to rise 9.5% in 2024 after increasing around 4% in 2023, LSEG data showed. But valuations have risen along with stock prices.
Historically, November is the best month for the S&P 500, says the "Stock Trader's Almanac."
Within equity markets, the technology and health care sectors are two of the best performing sectors globally. And in the corporate sphere, merger and acquisition (M&A) activity is already doubling last year's pace.
They also believe that the Federal Reserve will be careful not to raise interest rates too quickly, which could slow down economic growth. As a result, they expect the S&P 500 to grow by an average of 10-12% per year over the next five years.
Returns in the S&P 500 over the coming decade are more likely to be in the 3%-6% range, as multiples and margins are unlikely to expand, leaving sales growth, buybacks, and dividends as the main drivers of appreciation.
The bank suggests investors start to "nibble" on stocks when the S&P 500 hits 3,600, and "gorge" at 3,000. Once the ongoing bear market ends, the S&P 500 could be primed for a bull market run to 8,900 by 2028, BofA said.
How much will the S&P 500 be worth in 2030?
| Year | Price |
|---|---|
| 2027 | 6200 |
| 2028 | 6725 |
| 2029 | 7300 |
| 2030 | 8900 |
The S&P 500 5 year average return is 13.57%. Commonly referred to as “the market”, the S&P 500 is a collection of the 500 largest public companies in the United States.
On Thursday, the S&P 500 crossed the 5000 mark during intraday trading for the first time, and on Friday it ended above that level, notching its tenth record close of 2024 at 5,026. That puts the S&P 500 up 3.7% since the start of the year, on top of its 24% gain in 2023.
S&P 500 5 Year Return is at 79.20%, compared to 90.27% last month and 44.37% last year. This is higher than the long term average of 44.93%. The S&P 500 5 Year Return is the investment return received for a 5 year period, excluding dividends, when holding the S&P 500 index.
And it's a good place for investors to look for large-cap growth stocks. Here's why Tesla (NASDAQ: TSLA), Broadcom (NASDAQ: AVGO), and Honeywell International (NASDAQ: HON) stand out as three top Nasdaq-100 stocks to buy in 2024.
