From “Nasdaq”:

The stock market has performed incredibly well in 2023, with the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all gaining significantly. Heading into 2024, investors have to consider 10 stock market predictions for the new year. These include the expectation of a U.S. recession, the return of a bear market, and the end of the second-longest yield-curve inversion on record.

Investors anticipate a recession in 2024, based on data such as the Conference Board Leading Economic Index and commercial bank credit and money supply developments. It’s expected to be the most-anticipated recession in U.S. history, signaling a potential economic slowdown.

The bear market could return in 2024, especially given the historically high S&P 500 Shiller price-to-earnings ratio and the extended periods of premium valuations that have not been well-tolerated by the market.

The yield-curve inversion, which compares the 10-year Treasury bond to three-month Treasury bills, is likely to end in 2024. This could benefit highly interest-sensitive companies, such as mortgage real estate investment trusts (REITs), which make their living by borrowing money at low short-term lending rates.

The Federal Reserve’s forecast of three rate cuts in 2024 could result in an acceleration of the rate of inflation, particularly in core inflation, which could remain stubbornly high or reaccelerate, given recent economic growth and mortgage rate upticks.

The rise of artificial intelligence (AI) has been a primary catalyst driving the S&P 500 and Nasdaq Composite higher in 2023. However, history indicates that every next-big-thing investment trend goes through an initial bubble period. A potential bubble-popping event for AI could come from Nvidia, which has established itself as the infrastructure backbone of AI-accelerated data centers.

Finally, Microsoft stands ready to surpass Apple as the world’s largest publicly traded company by market cap, with Apple’s growth engine stalling as all of its physical products endured sales declines in fiscal 2023. With Apple failing to deliver in the growth department, Microsoft is poised to ascend to the top spot as the most valuable public company.



Read more: 10 Stock Market Predictions for 2024