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JPMorgan sees the S&P 500 dropping nearly 8% in 2024 as macro risks build up

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The new year will be tough for U.S. stocks, according to JPMorgan. The bank sees the S & P 500 ending 2024 at 4,200. That’s 7.8% below where the index closed Tuesday. “We expect a more challenging macro backdrop for stocks next year with softening consumer trends at a time when investor positioning and sentiment have mostly reversed,” Dubravko Lakos-Bujas, the bank’s chief global equity strategist, wrote. “Equities are now richly valued with volatility near the historical low, while geopolitical and political risks remain elevated.” Stocks have had a banner year in 2023, with the S & P 500 surging more than 18%. Those gains have been largely driven by sharp rallies from names tied to artificial intelligence, including Nvidia and Meta Platforms . That strong performance also comes despite a series of Federal Reserve rate hikes aimed at taming inflation in the U.S. .SPX YTD mountain SPX in 2023 However, Lakos-Bujas thinks lackluster earnings will put a damper on equity prices. Specifically, he sees S & P 500 profits growing 2% to 3% next year. The strategist recommends investors stay overweight on bond proxies and buy quality stocks “at a reasonable price with Utilities sector at a sweet spot of this mix.” — CNBC’s Michael Bloom contributed reporting.

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