Stocks closed 2023 near record highs. Here’s what Wall Street thinks is coming in 2024.

Stocks finished 2023 near all-time highs with the S&P 500 (^GSPC) gaining nearly 24% on the year.

The three major averages ripped higher in the final two months of 2023 after a pivot from the Federal Reserve has many investors increasingly betting that the central bank’s next interest rate adjustment will bring rates lower.

But despite the market’s newfound optimism to end the year, Wall Street doesn’t see much upside for stocks in 2024.

Given the rally, many strategists’ S&P 500 calls for 2024 already reflect a limited increase for stocks next year. The median target among the 20 Wall Street strategists tracked by Bloomberg shows the benchmark index finishing 2024 at 4,850, less than 2% higher than where the benchmark closed 2023.

Strategists at Goldman Sachs already boosted their 2024 target to reflect the recent run-up in stocks and the shift to a more dovish Fed. Goldman boosted its S&P 500 projection from 4,700 to 5,100 on Dec. 18.

And the range for next year’s targets is wide. Oppenheimer and Fundstrat are the most bullish, with year-end targets of 5,200 for the S&P 500, reflecting about 9% upside from the 2023 close. Meanwhile, the lowest call on the Street for 2024 is JPMorgan’s prediction that the S&P will sink to 4,200, which would mark a 12% decline for the benchmark index in 2024.

Will recession hit and bring down stocks ?
Much of the divide between bulls and bears headed into 2024 rests on where different firms see the economy headed next year.

Those that either see the economy not entering a recession at all, or believe that outcome has been talked about so much it won’t entail much impact for stocks, predict the S&P 500 hits at least 5,000 in 2024. That camp includes firms like Oppenheimer, Fundstrat, Goldman Sachs, Deutsche Bank, and Bank of America.

Brian Belski at BMO calls any pending recession the “Chicken Little recession,” a reference to the fictional character who insists the sky is falling and causes mass hysteria over it. Belski thinks if there is a downturn next year it will be a “recession in name only.”

“We will continue to take our cue from labor market trends, and unless they take a sharp turn for the worse, we are simply not concerned about the recession debate at this point,” Belski wrote in his 2024 outlook.

The team at Deutsche Bank is still in the recession camp, though. The analysts see economic growth slowing and “a mild recession” in the first half of the year. But to the firm’s chief US equity strategist Binky Chadha, the risks of recession would only lead to a “modest short-lived sell-off.”

Others still see a recession weighing on stocks in 2024. Evercore ISI’s Julian Emanuel wrote that stocks will be “down first into recession, then higher as inflation hits the [Fed’s 2%] target.” Emanuel believes the recession will come in the first half of the year before a rally leads the S&P 500 to his 4,750 target.

JPMorgan’s equity strategists are even more cautious about what a downturn could spell for stocks as they project the benchmark average closing 2024 at 4,200.

“Absent rapid Fed easing, we expect a more challenging macro backdrop for stocks next year with softening consumer trends at a time when investor positioning and sentiment have mostly reversed,” JPMorgan equity strategists led by Dubravko Lakos-Bujas wrote in the team’s 2024 outlook on Nov. 29.