From Morningstar:

The Morningstar US Market index reached a new high, recovering from 2022’s losses thanks to surging technology stocks. After a rough 2022, the index rebounded by more than 25% in 2023. It also returned to a record high by the end of the year. The stock market started 2023 strong, but in the middle of the year, it floundered. However, a rally in the bond market and a strong tech sector helped stocks bounce back.

Looking ahead to 2024, the stock market is in a different place than at the start of 2023. Expectations for the economy and monetary policy have changed. The focus now is on whether the gains in the stock market can broaden to other sectors and types of stocks. The advice for potential pullbacks in February and March is to eye stocks correlated to interest rates, like utilities and real estate.

Earnings season poses a threat due to potentially conservative guidance from management. Companies may issue guidance as they look ahead to an anticipated economic slowdown in the second half of the year. This slowdown would likely prompt a decision from the Fed to cut interest rates. According to Dave Sekera from Morningstar, stocks correlated to interest rates as well as value and small-cap stocks present the best opportunities for 2024.



Read more: US Stocks Hit Record Highs