.As 2023 comes to a close, there’s seemingly an abundance of optimism heading into 2024 when it comes to the S&P 500. If forecasts are correct, this should bode well for the Direxion Daily S&P 500 Bull 3X Shares ETF (SPXL), which is already up close to 50% for the year.
Analysts from banks and investment firms are already projecting that 2024 will see the S&P 500 in the green by the end of the year. Bank of America, for example, “said in a note they see the S&P 500 closing 2024 at 5,000, according to multiple outlets—a record high and a sign of confidence in the economy at large during a time when other strategists aren’t quite as bullish, but still optimistic,” according to a Forbes report.
Much of the optimism stems from the eventual rate cut the capital markets hope will happen in 2024. The recent rate pause by the Federal Reserve certainly amplified hopes, but when it will actually happen brings mixed projections. Global investment firm Goldman Sachs doesn’t see one happening until the fourth quarter of 2024, but still see moderate growth overall in the S&P 500.
“Our macro forecasts imply a benign outcome for equities, but the current starting point will limit the potential appreciation for the benchmark US equity index in 2024,” said David Kostin, Goldman Sachs Research chief US equity strategist. Analysts from Goldman Sachs also see the majority of S&P gains happening in the second half of the new year.
“Resilient economic growth in the beginning of the year will force the market to push back its current pricing that Fed cuts will begin in the second quarter,” Kostin said. “US election uncertainty will suppress risk appetite. Later in the year, the first Fed cut and resolution of election uncertainty will lift US equity prices.”
Much of the gains this year have been attributed to big tech. But can that last heading into the new year?
Will 2024 Be a Big Year for Big Tech?
2023 will go down as the year for big tech. It was highlighted by investor interest surrounding AI as the Nasdaq-100 is up over 40% thus far. The question now remains whether big tech can duplicate or exceed its performance this year. Goldman Sachs sees tech being a strong performer again in 2024. But the level of gains might be more temperate this time around, especially from the biggest tech names.
“You’ll get slightly better returns from the seven leading stocks. But not nearly the dramatic difference that you’ve had this year,” Kostin said during a media roundtable event last week. He noted that given big tech’s rise this year, the risk/reward ratio might not be as attractive.
In the meantime, big tech bulls can use the Direxion Daily Technology Bull 3X ETF (TECL). With its triple leverage, the fund is certainly not for the weak of heart. That’s because it seeks daily investment results equal to 300% of the daily performance of the Technology Select Sector Index.
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