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Will Stocks Finish 2024 Strong? Bull vs. Bear Case
Will Stocks Be Higher into 2025?
Wall Street is complex, constantly changing, and challenging to predict. For these reasons, savvy investors understand that striving to lay out the bull and bear cases in a sober, unbiased fashion is important. However, simply laying out the bull and bear case is far from a panacea, and some of the best and brightest investors understand the power of flexibility:
“You adapt, evolve, compete, or die.”~ Paul Tudor Jones
“You always need to be flexible, bending like a tree in the wind.” ~William O’Neil
“I change my mind a lot. I can be in love with something on Friday and short it on Wednesday.”~ Stanley Druckenmiller
Today’s commentary will analyze five critical data points in the current market with an “if, then” mindset.
What Rate Cuts Mean for the Market
The Federal Reserve and monetary policy laid out by Chairman Jerome Powell is an integral market piece to understand. The Fed’s policy drives liquidity, and liquidity drives equities. Powell recently confirmed that the Fed will cut rates this month.
Will the Fed Cut Interest Rates by .25 or .5?
The first rate cut after a hiking cycle is typically bullish for equities. The Fed has cut interest rates 14 times since 1929. Of the 14 rate cuts, 12 instances resulted in the S&P 500 Index being higher a year after the first rate cut.
However, the data says that investors should be concerned if the Fed shows panic and starts a rate cutting cycle with a .50% cut rather than a .25% cut. In both years the market was lower one year after the first cut (2001,2007), the Fed started with a 50bps cut.
Though the jobs market is showing signs of softening, the CME FedWatch Tool gives the odds of a .25% rate cut at 71% and a .5% cut at only 29%.
200-Day Has Contained Tech Rally
Though value stocks like AT&T and Altria have outperformed recently, theNasdaq 100 ETFand big tech stocks like Nvidia, Oracle and Microsoft have led the market.Because of this, market technicians should focus on QQQ.QQQ has held the 200-day moving average or the 40-week MA since March 2023. The analysis is simple: if QQQ continues to tend above the line it is bullish; below the line is bearish.
Market Cycle Analysis
According to InvesTech Research, the average bull market since the early 1930s has lasted nearly four years. Considering that the last bear market ended in late 2022, U.S. equities have ample runway into 2026 based on this metric.
Volatility Spikes Coincide with Generational Bottoms
The Volatility Index (VIX) is a fear gauge that displays Wall Street’s expectations for market turmoil. Spikes above $60 are very extreme and have only occurred three times in the past 30 years: October 2008 during The Global Financial Crisis, March 2020 during the COVID-19 Pandemic, and the beginning of last month when the “Yen Carry” unwound.
In each spike above $60, stocks staged generational bottoms and were much higher a year later.
September Pullbacks are Normal
Markets have retreated for four straight Decembers.
This September is no different. Nevertheless, September weakness has not led to a major correction in the past few years. In 2020, 2021, 2022, and 2023, the S&P 500 Index finished the year higher than the start of September.
Bottom Line
Investors should be flexible and keep an open mind about the market. Current metrics favor a continued bull market, but savvy investors prepare for either outcome.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Zacks Investment Ideas feature highlights: AT&T, Altria, Nvidia, Oracle and Microsoft
For Immediate Release
Chicago, IL – September 11, 2024 – Today, Zacks Investment Ideas feature highlights AT&T (T - Free Report) , Altria (MO - Free Report) , Nvidia (NVDA - Free Report) , Oracle (ORCL - Free Report) and Microsoft (MSFT - Free Report) .
Will Stocks Finish 2024 Strong? Bull vs. Bear Case
Will Stocks Be Higher into 2025?
Wall Street is complex, constantly changing, and challenging to predict. For these reasons, savvy investors understand that striving to lay out the bull and bear cases in a sober, unbiased fashion is important. However, simply laying out the bull and bear case is far from a panacea, and some of the best and brightest investors understand the power of flexibility:
“You adapt, evolve, compete, or die.”~ Paul Tudor Jones
“You always need to be flexible, bending like a tree in the wind.” ~William O’Neil
“I change my mind a lot. I can be in love with something on Friday and short it on Wednesday.”~ Stanley Druckenmiller
Today’s commentary will analyze five critical data points in the current market with an “if, then” mindset.
What Rate Cuts Mean for the Market
The Federal Reserve and monetary policy laid out by Chairman Jerome Powell is an integral market piece to understand. The Fed’s policy drives liquidity, and liquidity drives equities. Powell recently confirmed that the Fed will cut rates this month.
Will the Fed Cut Interest Rates by .25 or .5?
The first rate cut after a hiking cycle is typically bullish for equities. The Fed has cut interest rates 14 times since 1929. Of the 14 rate cuts, 12 instances resulted in the S&P 500 Index being higher a year after the first rate cut.
However, the data says that investors should be concerned if the Fed shows panic and starts a rate cutting cycle with a .50% cut rather than a .25% cut. In both years the market was lower one year after the first cut (2001,2007), the Fed started with a 50bps cut.
Though the jobs market is showing signs of softening, the CME FedWatch Tool gives the odds of a .25% rate cut at 71% and a .5% cut at only 29%.
200-Day Has Contained Tech Rally
Though value stocks like AT&T and Altria have outperformed recently, theNasdaq 100 ETFand big tech stocks like Nvidia, Oracle and Microsoft have led the market.Because of this, market technicians should focus on QQQ.QQQ has held the 200-day moving average or the 40-week MA since March 2023. The analysis is simple: if QQQ continues to tend above the line it is bullish; below the line is bearish.
Market Cycle Analysis
According to InvesTech Research, the average bull market since the early 1930s has lasted nearly four years. Considering that the last bear market ended in late 2022, U.S. equities have ample runway into 2026 based on this metric.
Volatility Spikes Coincide with Generational Bottoms
The Volatility Index (VIX) is a fear gauge that displays Wall Street’s expectations for market turmoil. Spikes above $60 are very extreme and have only occurred three times in the past 30 years: October 2008 during The Global Financial Crisis, March 2020 during the COVID-19 Pandemic, and the beginning of last month when the “Yen Carry” unwound.
In each spike above $60, stocks staged generational bottoms and were much higher a year later.
September Pullbacks are Normal
Markets have retreated for four straight Decembers.
This September is no different. Nevertheless, September weakness has not led to a major correction in the past few years. In 2020, 2021, 2022, and 2023, the S&P 500 Index finished the year higher than the start of September.
Bottom Line
Investors should be flexible and keep an open mind about the market. Current metrics favor a continued bull market, but savvy investors prepare for either outcome.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
Media Contact
Zacks Investment Research
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support@zacks.com
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.