Top Ten Market Predictions for 2024

Daniel Morgan Synovus, Trust Senior Portfolio Manager

1. Real GDP growth in 2024 will likely contract to a rate of just +1.0% to +1.5%, with housing being the weakest component. Inflation should fall amid full employment, leaving consumption resilient, while business investment spending weakens.

2. Strength in personal consumption, which represents 67% of overall gross domestic product (GDP), overshadows weakness in housing (3%), investment (13%) and slower government spending (17%). Risks include: Big private and government debt loads, economic supports fading or reversing like child tax credit and auto production.

3. Indicators underscore that core Inflation remains sticky through 2024 giving the Federal Open Market Committee (FOMC) room to keep rates “higher for longer.” Secular inflation drivers: Low housing affordability, auto “sticker shock” and solid wage growth/low unemployment.

4. Financial conditions will tighten as the economy slows. With the 10-year Treasury average yield settling between 3.75% to 4.25%, expect the rate to fall in late 2024 as the economy weakens and settles below the 4% level.

5. The attack by Hamas on Israel, the Russian invasion of Ukraine and lack of domestic energy exploration will restrict supply more than expected, driving oil prices higher, cutting into consumers’ disposable income.

6. Earnings revisions breadth will continue to weaken as more cautious corporate commentary overall centers on the macro economy. FY2024 consensus S&P 500 Index estimated EPS growth has fallen from 12% to just 3%!

7. Typically, an indicator of a market top, the outsized performance contribution of a few stocks — Microsoft, Apple, Nvidia, Alphabet, Amazon, Tesla and Meta — to the market cap weighted benchmark's return and earnings. Market, overall, breadth will need to spread to sustain the market rally.

8. Artificial Intelligence (AI) will act as a business productivity enhancement tool, opposed to a secular growth driver for the entire tech sector, like in the 1990s when the Y2K software bug, internet and wireless network buildouts drove CAPEX!

9. The current market rally appears to be turbocharged by expectations that the Fed will cut rates as much as four-to-six times in 2024. The Fed, which has not wavered from its 2% inflation target, is unlikely to begin cutting rates until the fourth quarter 2024, contrary to the “Street’s” expectations.

10. Equity investors should keep expectations for 2024 muted as stocks are priced for perfection! Valuations and profits will battle each other for dominance as drivers of equity prices.

The views, opinions and positions expressed are those of the referenced authors at the time of publication and are based upon information available at that time. There can be no assurance that any of the beliefs and views expressed herein will prove to be accurate, and actual outcomes or events may vary significantly from those presented. The authors’ views are subject to change and do not reflect the views, opinions or positions of Synovus Financial Corp, who makes no representations as to accuracy, completeness, timeliness, suitability or validity of information presented and will not be liable for any errors, omissions, or delays in this information or any losses, injuries or damages arising from its display or use. The information provided in this material is intended to highlight present economic and market conditions in general. It does not constitute a recommendation and is not meant for use as personalized or individual investment advice. We encourage you to speak with your financial professional concerning your specific investment goals and risk tolerance before making investment decisions.