We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
After a solid 2023, investors biggest question is whether the stock market rally can continue next year. So far, Wall Street analysts have come up with varied views on the S&P 500, indicating moderate upside (which translates into a record high too) for the key U.S. equity gauge next year. Now, the question is what’s in store for the Nasdaq Composite in 2024. Let’s find out.
The index Nasdaq Composite has surged a massive 40% this year mainly buoyed by the tech rally. The tech rally in 2023 was led by a massive thrust toward artificial intelligence (AI), especially generative AI. The rapid penetration of digitization during the lockdown, ushered in significant adoption of AI.
Moreover, a resilient consumer base has boosted the consumer stocks too in 2023, helping to send the index to a great height. We expect the index to log gains even in 2024, although the quantum of gains will likely be less than this year.
Inside the Nasdaq Composite Index
The technology sector accounts for more than 55% of the index with 457 constituents. Consumer Discretionary comes second with 18.75% exposure and 458 stocks. Health Care takes about 7.87% of the index with 1044 stocks, followed by industrials which occupies 4.65% of the index (with 351 stocks).
The index’s top weight of 12.53% goes to Apple, followed by Microsoft (10.98% weight), Amazon (6.14% weight) and Nvidia (5.03%). The top-10 holdings of the index take about 50% of the basket (As of Sep 29, 2023).
Factors That Should Boost Nasdaq in 2024
Below we highlight several factors that should boost the Nasdaq in 2024.
A Less-Hawkish or Dovish Fed in 2024
The latest datapoints indicate that inflation is on the decline. This may cause a less-hawkish Fed in the near term. There is now chance of 75 bps rate cut in 2024. Since the Nasdaq is a growth index and fares better in a low-rate environment, the index has every reason to hit further highs. Moreover, with the Fed being less-hawkish, the participation in the stock market is broadening out, which is a key tailwind for the sustenance of bull market.
AI Boom Here to Stay
The year 2023 was crucial in the AI industry, characterized by dynamic company moves, groundbreaking initiatives, major product launches, substantial investments and strategic acquisitions. And a wider spread of AI among consumers is expected next year. Bob O’Donnell, president of TECHnalysis, believes 2024 will be pivotal for AI, integrating it into daily tools like PCs, smartphones and multimedia platforms, as quoted in a Yahoo Finance article.
Companies like Google, Microsoft and Amazon introduced significant updates to their AI services, lately. The year 2024 is likely to witness the launch of AI-equipped PCs and other devices, moving some cloud-based AI processes to local devices (read: AI ETFs: Review of Transformative Year 2023 & Outlook for 2024).
Apple to Hit $4 trillion Market Cap?
Wedbush analyst Daniel Ives recently predicts Apple will become the first $4 trillion company in 2024. This optimistic outlook arises from the likely pace of growth and monetization at the company in the coming year, as quoted on investing.com. The analyst foresees a robust holiday season for Apple, projecting iPhone growth to outperform expectations in the December quarter.
Strong upgrade activity in the United States and China is expected to contribute to this positive trend. As Apple is the key holding of the Nasdaq, such a milestone, if hit, would benefit the Nasdaq.
Biotech Stocks to Rebound in 2024?
The Nasdaq has solid exposure to the biotech space. Biotech stocks have staged a rebound lately and are being lifted by M&A activities. Novel drug launches, low rates and easy access to funds should buoy the zone in 2024.
ETF Picks
We highlight a few ETFs related to the Nasdaq that have decent upside left for 2024. These include Zacks Rank #2 (Buy) Invesco Nasdaq 100 ETF (QQQM - Free Report) , Zacks Rank #2 Invesco QQQ (QQQ - Free Report) , Zacks Rank #2 Direxion NASDAQ-100 Equal Weighted Index Shares (QQQE - Free Report) , Zacks Rank #2 First Trust NASDAQ-100 Equal Weighted Index Fund (QQEW - Free Report) and Zacks Rank #2 Fidelity Nasdaq Composite Index ETF (ONEQ - Free Report) .
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
A Guide to Nasdaq ETF Investing
After a solid 2023, investors biggest question is whether the stock market rally can continue next year. So far, Wall Street analysts have come up with varied views on the S&P 500, indicating moderate upside (which translates into a record high too) for the key U.S. equity gauge next year. Now, the question is what’s in store for the Nasdaq Composite in 2024. Let’s find out.
The index Nasdaq Composite has surged a massive 40% this year mainly buoyed by the tech rally. The tech rally in 2023 was led by a massive thrust toward artificial intelligence (AI), especially generative AI. The rapid penetration of digitization during the lockdown, ushered in significant adoption of AI.
Moreover, a resilient consumer base has boosted the consumer stocks too in 2023, helping to send the index to a great height. We expect the index to log gains even in 2024, although the quantum of gains will likely be less than this year.
Inside the Nasdaq Composite Index
The technology sector accounts for more than 55% of the index with 457 constituents. Consumer Discretionary comes second with 18.75% exposure and 458 stocks. Health Care takes about 7.87% of the index with 1044 stocks, followed by industrials which occupies 4.65% of the index (with 351 stocks).
The index’s top weight of 12.53% goes to Apple, followed by Microsoft (10.98% weight), Amazon (6.14% weight) and Nvidia (5.03%). The top-10 holdings of the index take about 50% of the basket (As of Sep 29, 2023).
Factors That Should Boost Nasdaq in 2024
Below we highlight several factors that should boost the Nasdaq in 2024.
A Less-Hawkish or Dovish Fed in 2024
The latest datapoints indicate that inflation is on the decline. This may cause a less-hawkish Fed in the near term. There is now chance of 75 bps rate cut in 2024. Since the Nasdaq is a growth index and fares better in a low-rate environment, the index has every reason to hit further highs. Moreover, with the Fed being less-hawkish, the participation in the stock market is broadening out, which is a key tailwind for the sustenance of bull market.
AI Boom Here to Stay
The year 2023 was crucial in the AI industry, characterized by dynamic company moves, groundbreaking initiatives, major product launches, substantial investments and strategic acquisitions. And a wider spread of AI among consumers is expected next year. Bob O’Donnell, president of TECHnalysis, believes 2024 will be pivotal for AI, integrating it into daily tools like PCs, smartphones and multimedia platforms, as quoted in a Yahoo Finance article.
Companies like Google, Microsoft and Amazon introduced significant updates to their AI services, lately. The year 2024 is likely to witness the launch of AI-equipped PCs and other devices, moving some cloud-based AI processes to local devices (read: AI ETFs: Review of Transformative Year 2023 & Outlook for 2024).
Apple to Hit $4 trillion Market Cap?
Wedbush analyst Daniel Ives recently predicts Apple will become the first $4 trillion company in 2024. This optimistic outlook arises from the likely pace of growth and monetization at the company in the coming year, as quoted on investing.com. The analyst foresees a robust holiday season for Apple, projecting iPhone growth to outperform expectations in the December quarter.
Strong upgrade activity in the United States and China is expected to contribute to this positive trend. As Apple is the key holding of the Nasdaq, such a milestone, if hit, would benefit the Nasdaq.
Biotech Stocks to Rebound in 2024?
The Nasdaq has solid exposure to the biotech space. Biotech stocks have staged a rebound lately and are being lifted by M&A activities. Novel drug launches, low rates and easy access to funds should buoy the zone in 2024.
ETF Picks
We highlight a few ETFs related to the Nasdaq that have decent upside left for 2024. These include Zacks Rank #2 (Buy) Invesco Nasdaq 100 ETF (QQQM - Free Report) , Zacks Rank #2 Invesco QQQ (QQQ - Free Report) , Zacks Rank #2 Direxion NASDAQ-100 Equal Weighted Index Shares (QQQE - Free Report) , Zacks Rank #2 First Trust NASDAQ-100 Equal Weighted Index Fund (QQEW - Free Report) and Zacks Rank #2 Fidelity Nasdaq Composite Index ETF (ONEQ - Free Report) .