Wall Street Bull Predicts Higher Stock Climbs in 2024

Chief strategist, Tom Lee of Fundstrat, acknowledges that he may have underestimated the potential climb of stocks in 2024. Lee's current year-end target for the S&P 500 to finish at 5,200 seems inadequate in light of the index's significant boost in January.

The Key Data Point for Market Trends

Amidst a week packed with economic data and earnings announcements, all eyes are on the S&P 500's performance on the final trading day of the month. Lee believes that if the index maintains its 3.25% gain from January through Tuesday, history indicates the potential for double-digit gains throughout the year.

Historical Patterns Fuel Optimism

Lee highlights a historical pattern that suggests positive outcomes when certain conditions are met. Historically, when the index rose by at least 15% the previous year (which occurred 28 times) and January yielded positive returns (which happened 13 times), the median full-year return stood at 16%. Interestingly, positive returns for the entire year occurred in 92% of cases, with the exception of 2018.

A Different Scenario in 2024

Lee notes that 2018 was an exception due to the Federal Reserve's tight monetary policy. However, such conditions do not seem to be at play in 2024. Therefore, if the January barometer holds true, Lee suggests that the upside potential for the S&P 500 target could be as high as 5,500 or possibly more.

Impressive Gains Await

A successful attainment of Lee's projection would yield a gain of over 11% from the S&P 500's most recent close at 4924.97. However, U.S. stocks experienced a decline on Wednesday, with the S&P 500 down 0.6% at 4897 and the Nasdaq Composite down 1.1% at 15,339. Conversely, the Dow Jones Industrial Average traded higher, up 77 points or 0.2% at 38,541.