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One of Wall Street’s biggest bulls is telling clients that he may have underestimated how much higher stocks can climb in 2024.
Tom Lee, chief strategist at Fundstrat, said his current year-end target for the S&P 500 to finish 2024 at 5,200 might be too low, given how much higher the index has climbed in January.
Amid a busy week packed with market-moving economic data and earnings, not to mention Wednesday’s Federal Reserve press conference and interest-rate decision, Lee said the most important data point for markets will be where the S&P 500 finishes on the final trading day of the month. Barring a sharp selloff that erases the index’s 3.25% gain for January through Tuesday, Lee says history would suggest that the index could post double-digit gains for the full year.
Over the past 74 years, when the index has risen 15% during the prior year, which has happened 28 times, and January has seen a positive return, which has happened 13 times, the median full-year return has been 16%.
FUNDSTRAT
Furthermore, under these conditions, returns have been positive for the full year 92% of the time, with the only exception being 2018.
FUNDSTRAT
Back in 2018, the Fed was tightening monetary policy on autopilot, Lee said. That doesn’t appear to be the case in 2024.
“If the January barometer is right, the upside to our S&P 500 target is possibly as high as 5,500 or more,” Lee said.
That would represent a gain of more than 11% from the S&P 500’s Tuesday close, which saw the index finish at 4924.97.
U.S. stocks tumbled on Wednesday, with the S&P 500
SPX
down 0.6% at 4897 shortly after the open, while the Nasdaq Composite
COMP
was down 1.1% at 15,339. The Dow Jones Industrial Average
DJIA
traded higher, up 77 points, or 0.2%, at 38541.
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