Just as Wall Street strategists are predicting that the US stock market will hit a historic high next year, JPMorgan Chase is unique and has released its most pessimistic forecast to date.
On Wednesday Eastern Time, Dubrovko Lakos Bujas, Chief Global Equity Strategist at Morgan Stanley, released a forecast report stating that as global economic growth slows, household savings shrink, and geopolitical risks remain high, national elections, including those in the United States, may intensify policy fluctuations. The S&P 500 index will drop to 4200 points by the end of 2024, about 8% below current levels.
Xiaomo emits Wall Street's most pessimistic expectations
It is worth mentioning that JPMorgan's perspective is different from many people on Wall Street. After the strong performance of the US stock market this year hit many analysts who were bearish at the end of last year, most analysts on Wall Street have turned to the bullish camp this year, issuing expectations that the S&P 500 index will reach a new high next year.
Bank of America and Royal Bank of Canada both expect the S&P 500 index to reach a new high of 5000 points, with Deutsche Bank even shouting out its expectation of 5100 points. Even Morgan Stanley analyst Mike Wilson, who has always been firmly bearish on the US stock market, has become more optimistic, predicting that the S&P 500 index will close at 4500 points by the end of next year, which is basically the same as the current US stock market.
Note: Strategists predict the target price for the S&P 500 index by the end of 2024
Among the rising voices, JPMorgan Chase's forecast is the lowest among major investment banks on Wall Street.
"If it weren't for the Federal Reserve's rapid easing policy, we expect the US stock market to face a more challenging macro background next year. With investor positions and sentiment largely reversed, consumer trends will weaken," wrote the small Mo strategists in their report.
As of the close of Wednesday Eastern Time, the S&P 500 index closed at 4550.80 points. Since the beginning of the year, the index has accumulated an increase of 18.52%. The main reasons behind this are strong economic data, continuously declining inflation, and people believing that the interest rate hike by Federal Reserve officials is coming to an end. In addition, the rebound in corporate profits and the boom in artificial intelligence have driven technology stocks to rise significantly, which has also boosted market sentiment throughout 2023.
Last year, Xiaomo suffered a humiliating blow and still insisted on being bearish?
In fact, JPMorgan Chase had a similar pessimistic outlook for the US stock market in 2023 at the end of last year - however, the actual trend of the US stock market this year does not match JPMorgan Chase's expectations: the US stock market continues to strengthen this year and is expected to achieve double-digit annual gains.
The strategists at Xiaomo wrote in their report, "In some aspects, our forecast for the macro background of 2024 is similar to our expectations for 2023 a year ago, but the statement is not as pessimistic."
JPMorgan Chase said that considering the prospect of the Federal Reserve implementing longer and higher interest rates, Wall Street's general expectations for US stocks seem to be too high at present.