July 12, 2024

JPMorgan’s Grim Projections: Buckle Up for a Bumpy Stock Market Ride in 2024

Image Credits: John Taggart/Bloomberg

JPMorgan Chase warns that the dazzling highs of the U.S. stock market’s recent rally might be short-lived. In a recent analyst note, Dubravko Lakos-Bujas, the chief global equity strategist at JPMorgan, paints a sad picture of the stock market’s future, predicting a sharp decline in the S&P 500 by the end of 2024. The forecast, the most bearish among major Wall Street firms, cites slowing economic growth, dwindling household savings, and geopolitical turmoil as potential catalysts for the impending downturn.

“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,” cautions Lakos-Bujas.

The JPMorgan note suggests a potential 8% drop, envisioning the benchmark index reaching 4,200 by the close of 2024. This forecast diverges significantly from other Wall Street predictions, with even long-time bear Michael Wilson of Morgan Stanley envisioning a less severe decline, predicting the S&P 500 to end 2024 around 4,500.

“Dwindling household savings, steep borrowing costs, and cooling global demand” are the culprits behind this gloomy outlook, as Lakos-Bujas points to rising borrowing costs and a cooling global economy. He notes, “Absent significant monetary or fiscal policy supports, we see consensus growth assumptions at this point [as] more hope than realistic.”

This grim outlook follows a volatile year for the stock market, marked by a mid-2023 tumble driven by fears of a Federal Reserve interest rate hike. However, the market swiftly rebounded, with the S&P 500 soaring nearly 11% since hitting bottom in October. The Dow Jones Industrial Average and the Nasdaq Composite have seen similar impressive climbs, rising over 36% each.

As investors brace for potential turbulence in the coming year, the question looms: Is JPMorgan’s forecast a cautionary tale or an opportunity for strategic planning? In this blog post, we delve into the intricacies of the warning signs, challenge assumptions, and provide insights to help investors navigate the stormy seas of the stock market in 2024.

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