In overnight trading on Tuesday, stock futures remained largely flat, setting the stage for the commencement of the new year after an unexpectedly robust 2023, which witnessed a remarkable 24% surge in the S&P 500.
Futures tied to the Dow Jones Industrial Average exhibited a modest gain of 23 points, while S&P 500 futures experienced marginal growth, and Nasdaq 100 futures hovered around the flatline. Market activity had been halted on Monday in observance of New Year’s Day.
The conclusion of 2023 marked a dynamic period for the stock market, with the S&P 500 embarking on a nine-week winning streak, achieving its most robust performance since 2004. The resilience of the economy, easing inflation, and signals from the Federal Reserve indicating a cessation of rate hikes contributed to a substantial relief rally in risk assets. Notably, the market navigated challenges, including a regional banking crisis and geopolitical conflicts in Ukraine and the Middle East.
Technology shares, particularly mega-cap stocks, spearheaded the 2023 surge, with Apple soaring by 48%, Microsoft witnessing a nearly 57% surge, and Nvidia experiencing a meteoric rise of 239%. The Nasdaq Composite, heavily influenced by the tech sector, concluded the year with a remarkable 43.4% gain, marking its most robust performance since 2020.
The blue-chip Dow Jones Industrial Average achieved a 13.7% gain and secured a new record in 2023.
Despite the impressive performance in 2023, Wall Street strategists are forecasting more subdued returns for stocks in the upcoming year, according to the CNBC PRO exclusive Market Strategist Survey. The top 14 strategists from major firms anticipate the S&P 500 reaching 4,881 by the end of 2024, representing a modest 2.3% increase from Friday’s close at 4,769.83.
Some strategists are sounding a note of caution, pointing to potential headwinds such as a weaker economy and tepid consumer spending, factors that could translate into slower earnings growth for Corporate America. Adam Crisafulli, founder of Vital Knowledge, highlighted that the most significant risk facing equities may not be related to central bank decisions but rather the potential for a more substantial-than-expected decline in earnings per share amid a backdrop of cooler growth and diminishing pricing power.
