The performance of Canada’s main index, the TSX, and its U.S. counterparts, the S&P 500 and Nasdaq, has taken Bay Street and Wall Street by surprise. After a robust 2023, in which the TSX rallied 8.1%, the S&P 500 grew 24.2%, and the Nasdaq advanced an impressive 43.4%, the outlook for 2024 was positive, but underwhelming.
The overall consensus for U.S. indexes was for modest single-digit gains in 2024 of around 8%. JPMorgan Chase and Morgan Stanley were more bearish, expecting the S&P 500 to fall in 2024. The median prediction of 23 money managers and strategists was for the TSX to end the year up slightly at 21,000.
Heading into 2024 the BMO Capital Markets had a target of 23,000 for the TSX and 4,900 for the S&P 500. In a Reuters poll conducted near the end of 2023, analysts predicted the S&P 500 would finish 2024 at 4,700.
What Can We Expect for Stocks Toward the End of 2024?
The above-mentioned targets may have been too conservative with the TSX, Nasdaq, and S&P 500 all recently hitting record levels, buoyed by better-than-expected earnings growth, falling inflation, lower risks of a recession, and upcoming interest rate cuts.
On May 21, the TSX hit a record intra-day high of 22,554.98. On May 23, the S&P 500 hit a record high of 5,341.88 with the Nasdaq hitting a fresh high of 17,032.66 on May 28. Through the first five months of 2024, the TSX has already climbed 5.4%, the S&P 500 is up 9.9%, and the Nasdaq has grown 12.1%.
The rash of new highs has forced analysts to revise their year-end forecasts for the S&P 500 and TSX. UBS Global Research is the most bullish when it comes to the S&P 500, with an upgraded year-end target of 5,600 points from 5,400. This implies an additional upside of 6.6%.
BMO Capital Markets has also raised its forecast for the S&P 500 to 5,600 with Wells Fargo upping its guidance to 5,535 and Deutsche Bank lifting its forecast to 5,500.
For the TSX, BMO raised its full-year guidance to 24,500. This points to an additional upside of 10.8%. More bullish calls have the index closing out 2024 at 25,149; this points to a potential upside of 13.7%.
Which stocks could continue to do well in 2024? Upcoming interest rate cuts from the Bank of Canada, as early as June, should help juice large, interest-sensitive dividend stocks, including banks, pipelines, and telecommunication.
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Strong earnings and industry tailwinds have helped lift the TSX, S&P 500, and Nasdaq to record levels, prompting analysts to raise their full-year 2024 forecasts. Which stocks should perform better than others? Ask the trading professionals at Learn-To-Trade.com.
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