Ryan Detrick, Carson Group's chief market strategist, sees the stock market rallying through year's end and continuing its bullish run well into 2024. He cites an economy that's on firm footing.
"Sure, things are 'slowing down' some, but we like to say they are normalizing, not slowing down. Could we really keep growing at 400k jobs a month like last year? No, but a steady 150k to 200k is perfectly normal and in line with pre-COVID trends," he wrote in a column posted on the firm's blog Thursday.
"The consumer remains strong and incomes are growing at a very healthy clip as well. If we can avoid a recession next year — our base case — then we think the chances of a year with potential low double digits returns is quite likely," Detrick said.
Carson Group expects a year-end rally and believes that stocks probably will reach all-time highs in 2024's first half. The following are three reasons for Detrick's bullishness.
Strong Earnings
"We've seen analysts continue to come in way too low on estimates and this trend likely continues. The third quarter was expected to see earnings fall slightly, now S&P 500 earnings are expected to come in up close to 6%," Detrick wrote.
"Looking ahead, companies in the S&P 500 now expect to see record profits over the next 12 months. You know what tends to happen when profits are at a record? Stocks tend to follow, something we expect to see in 2024."
Profit margin expectations are increasing as well, despite talk for a year that they're too high and must fall, Detrick wrote. "If both profits and profit margins are increasing next year, that should be a nice tailwind for equities."
Election Timing
Historically, pre-election years tend to see strong equity returns, especially when a first-term president is in office, "which has played out nicely once again in 2023," Detrick noted.
