Riding the Bull: Key trends driving the US Stock Market in 2024

By Hemant Sood

The US stock market has entered a bull market phase in 2024, marked by strong gains and increased investor optimism. This growing momentum is being driven by several major developments, each of which is a result of the intricate interaction of geopolitical, technological, and economic variables. The main themes influencing the market—technological developments, monetary and fiscal policies, corporate profits, and international economic conditions.

S&P 500 forecast

Wall Street analysts are projecting that S&P 500 companies will continue to overcome rising costs. Analysts estimate S&P 500 earnings increased 9.2% year over year in the second quarter. They project another 8.3% in the third quarter and anticipate 17.5% in the fourth.

Energy Sector

Analysts see the energy sector as leading the way forward. They project 17.8% average upside from energy stocks and 16.4% upside for consumer discretionary stocks.

Interest Rates

The Interest rates are at an all-time high, to tackle inflation. The FED cannot cut rates instantly, because that will undo the progress they have made over the years. So, we can expect a tighter monetary policy to curb inflation and protect consumers. Henceforth, this should be followed by lowering rates very slowly which will reflect in portfolios seeing huge returns and making stocks a more lucrative investment.

Post Pandemic USA

After the pandemic, the country had seen a shortage of semiconductor chips and inefficient supply chains. This has been reversed to drive a rebound in global trade.

Artificial Intelligence

As per sources, AI-driven productivity could add 30 basis points to next year’s net profit margins for S&P 500 companies. There’s a particular opportunity for efficiency gains among services-oriented sectors and industries, such as software and services, consumer services, and financial services.

Robust GDP Growth

The U.S. economy continues to recover from the post-pandemic disruptions, with GDP growth forecasted to remain strong. This recovery is fueled by resilient consumer spending, business investments, and favourable fiscal policies.

Job Market Strength

The unemployment rate is at historic lows, boosting consumer confidence and spending, which in turn supports corporate earnings and stock valuations. The unemployment rate is at 4% (0.3% lower than previous year).

Consumer Behaviour and Market Trends

Shift to Experiences: There’s a notable shift in consumer spending from goods to experiences, benefiting sectors like travel, entertainment, and hospitality.

Digital Transformation: The ongoing digital transformation in retail, finance, and services is driving growth in e-commerce, fintech, and digital marketing. The U.S. digital transformation market size was estimated at USD 288.90 billion in 2023 and is predicted to be worth around USD 2,943.85 billion by 2033, at a CAGR of 26.1% from 2024 to 2033.

Strong Economy

A strong economy is a key indicator to a bull run. A strong economy tends to invite more investors in the stock market whether they are institutional investors or retail investors while attracting foreign institutional investors.

So much market participation leads to strong liquidity in the market and hence becomes a key factor in the bull run. It includes factors like growth in GDP, low levels of unemployment and overall positive sentiment in the market. The regional GDP growth is projected to be 5.8 % (an upward revision of 0.6 percentage points since January) in the year 2024. The year 2023 showed a better-than-expected real GDP growth of 2.8% which had a great impact on the stock market.

To wrap up, because of the magnificent increase in technology, AI tools, and the global economy, the U.S Stock exchange has seen a bull trend in 2024. Fiscal policies, renewable sources and business profitability have contributed to the same. Some industries that have been lacking before having grown well like biotechnology, health care, and real estate. By seeing the trends and the performance of the market this year all investors are positive as it thus boost investor confidence towards the market and end up buying various financial instruments in the market constituting to a good rise in 2024.

(Author is Managing Director of Findoc)

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