April 2024 Stock Market Forecast (2024)

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Reaching new all-time highs in March, the S&P 500 has finished its best first quarter since 2019.

The S&P 500 posted a total return of 3.2% in March, propelled by relatively positive economic data. It is now ahead 10.6% year-to-date in 2024 as concerns over a U.S. economic recession have subsided and investors have shifted their attention to the timing of a Federal Reserve pivot from monetary policy tightening to policy easing.

Investors are optimistic the market can maintain its mojo in April, which has historically been one of the strongest months of the year for the S&P 500.

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First Quarter Market Recap

In addition to big gains for the , an ongoing rally in artificial intelligence related stocks and dovish commentary by Federal Reserve officials drove the Dow Jones Industrial Average higher by 6.1% and the Nasdaq higher by 9.3% in the first quarter.

The technology, consumer cyclical and consumer defensive sectors led the market gains in the first quarter, each generating total returns of around 8% or more. The stock market rally has been broad-based, with only the real estate sector finishing the quarter in the red.

Best and Worst Performing Stocks

AI server maker Super Micro Computer (SMCI) was the best-performing S&P 500 stock of the first quarter by a wide margin, gaining 255% year-to-date as investors continue to pile into AI stocks. Super Micro Computer’s stock has returned a staggering 502% since the beginning of 2023.

The top-performing S&P 500 stock of 2023, AI chipmaker Nvidia (NVDA), also continued its bullish momentum in the first quarter of 2024. Nvidia shares are up 82% year-to-date and 321% since the beginning of last year, pushing the company’s market capitalization to $2.29 trillion.

On the other end of the spectrum, struggling electric vehicle maker Tesla (TSLA) was the worst-performing stock in the S&P 500 in the first quarter. Growing competition in China is forcing Tesla to cut prices on its EVs, and Tesla’s once enviable automotive revenue growth slowed to just 3% year-over-year in the fourth quarter.

Boeing (BA) shares also tumbled more than 25% in the first quarter as the company’s quality control problems continue to weigh on its stock price.

Fed Pivot Coming?

For the S&P 500 to continue its hot start to 2024, the Federal Reserve will likely need to make further progress in bringing down inflation so it can stay on track to begin cutting interest rates sometime this year.

The consumer price index gained 3.2% year-over-year in February, down from peak inflation levels of 9.1% in June 2022 but still well above the Federal Reserve’s 2% long-term target.

While the Federal Reserve has made significant progress on inflation, some economists are worried so-called “sticky” inflation will make the last leg of the Fed’s mission the hardest of all. For example, shelter prices continue to rise, gaining 0.4% on a monthly basis and 5.7% on an annual basis in February.

In March, the FOMC opted to maintain interest rates at the current target range of 5.25% to 5.5%, but Fed Chair Jerome Powell noted that “it will likely be appropriate to begin dialing back policy restraint at some point this year.”

Are Interest Rate Cuts Still Coming?

The Fed’s updated long-term economic projections are calling for three interest rate cuts of 25 basis points each by the end of 2024.

The Bureau of Economic Analysis reported U.S. GDP growth of 3.4% in the fourth quarter, suggesting elevated interest rates aren’t hurting U.S. corporations as much as some economists had feared.

Bill Adams, chief economist for Comerica Bank, says there’s simply no denying the U.S. economy is in good shape.

“Real GDP is growing solidly, fueled by solid consumer spending and brisk growth of investment in nonresidential structures,” Adams says.

“The economy will likely grow moderately in 2024 as inflation continues to gradually move back to the Fed’s target.”

How the Bond Market Is Reacting

The bond market is currently pricing in a 95.8% chance the Federal Open Market Committee will continue to keep interest rates at their current levels at its next meeting, which concludes on May 1. Bond investors see a 63.6% chance the FOMC will begin cutting interest rates by June, according to CME Group.

Jeremy Straub, CEO and chief investment officer at Coastal Wealth, says interest rate cuts would add fuel to the stock market rally, but they may not be necessary for the S&P 500 to maintain its positive momentum.

“While rate cuts from the Federal Reserve would be welcome news for stocks, they are not a requirement for a strong market. The market has been able to rally for the past 18 months even with high interest rates and we believe stock investors are adjusting to this new normal of higher interest rates,” Straub says.

U.S. Recession Watch

The Fed is reaching a critical point in its battle against inflation. The next couple of months will be crucial to the central bank’s effort to navigate a so-called soft landing for the U.S. economy without tipping it into a recession or allowing a potentially devastating rebound in inflation.

Recession fears have subsided in recent months, but the New York Fed’s recession model still predicts a 58.3% chance of a U.S. recession sometime in the next 12 months.

One of the most convincing signs that a soft landing is possible has been the resilience of the U.S. labor market.

The Labor Department reported the U.S. economy added 275,000 jobs in February, exceeding economist estimates of 198,000 jobs added. However, the U.S. unemployment rate of 3.9% was up slightly from January and is currently at its highest level since January 2022.

Sam Millette, director of fixed income for Commonwealth Financial Network, says all indicators suggest initial estimates for first-quarter U.S. GDP growth will be solid.

“While the strong growth to end 2023 was impressive on its own, it also helps explain the economic resilience that we’ve seen throughout the first quarter, as the positive momentum from the end of last year has carried over into 2024,” Millette says.

“While economists still expect to see slowing growth in the first quarter compared to the end of last year, slowing growth is still growth and the economic backdrop is expected to remain supportive for markets.”

Critical First-Quarter Earnings Season

Elevated interest rates increase borrowing costs for both U.S. consumers and corporations. Typically, that puts pressure on the economy and the stock market. Inflation also increases input costs for U.S. companies, squeezing profit margins and weighing on earnings.

Despite the challenges, S&P 500 companies reported 3.6% year-over-year earnings growth in the fourth quarter, with seven out of eleven market sectors reporting positive earnings growth.

First-quarter earnings season kicks off in April, and analysts are expecting another quarter of modest growth. Wall Street analysts’ consensus estimates predict 3.6% earnings growth and 3.5% revenue growth for S&P 500 companies in the first quarter.

Analysts project full-year S&P 500 earnings growth of 11.0% in 2024, but analysts are more optimistic about some market sectors than others.

Looking Ahead at Performance

The communication services sector has the highest percentage of analyst buy ratings at 63%, followed by the energy sector at 62%. The materials sector has the lowest percentage of analyst buy ratings at just 45%.

The consensus 12-month analyst price target for the S&P 500 is 5,614, representing about 6.8% upside from current levels.

Adam Turnquist, chief technical strategist for LPL Financial, says the S&P 500 is in a strong uptrend heading into earnings season.

“While stocks are extended to the upside, this backdrop suggests pullbacks should be used as buying opportunities,” Turnquist says.

Investors will get their first meaningful feedback on the fourth quarter when big bank stocks Citigroup (C), JPMorgan Chase (JPM) and Wells Fargo (WFC) kick off earnings season and release their quarterly reports on April 12.

How To Invest in April

Since 1950, when the S&P 500 is up in each of the first three months of the year, it averages a 1.8% gain in April, a 3.1% gain in the second quarter and a 9.8% gain in the remaining nine months of the year.

In addition, in years the S&P 500 has gained at least 10% in the first quarter, it has averaged a 6.5% gain over the final nine months of the year.

Carol Schleif, chief investment officer at BMO Family Office, says investors shouldn’t necessarily be spooked if companies don’t live up to sky high expectations this earnings season.

“Current levels in stocks leave little room for disappointment and we wouldn’t be surprised to see a pullback at some point, and such a retracement would be normal in the overall bullish trajectory that we are in,” Schleif says.

April 2024 Stock Market Forecast (2024)

FAQs

April 2024 Stock Market Forecast? ›

Wall Street analysts' consensus estimates predict 3.6% earnings growth and 3.5% revenue growth for S&P 500 companies in the first quarter. Analysts project full-year S&P 500 earnings growth of 11.0% in 2024, but analysts are more optimistic about some market sectors than others.

Do stocks usually go up in April? ›

According to Reuters, since 1945, April and December are tied as the best-performing months of the year for stocks, with an average return of 1.6%. (September is notoriously the worst, with an average loss of -0.6%.) During recessions, April's positive performances can be even more pronounced.

Should I pull my money out of the stock market? ›

Key Takeaways. While holding or moving to cash might feel good mentally and help avoid short-term stock market volatility, it is unlikely to be wise over the long term. Once you cash out a stock that's dropped in price, you move from a paper loss to an actual loss.

Is now a good time to put money in the stock market? ›

Stock prices have surged significantly over the past 18 months. The S&P 500 is up by 45% since it bottomed out in October 2022, while the tech-heavy Nasdaq has soared by a whopping 58% in that time. Investing now, then, means paying much higher prices than you would if you'd bought a year or two ago.

Where will the S and P be in 10 years? ›

Returns in the S&P 500 over the coming decade are more likely to be in the 3%-6% range, as multiples and margins are unlikely to expand, leaving sales growth, buybacks, and dividends as the main drivers of appreciation.

What is the best month to buy stocks? ›

Historically, April, October, and November have been the best months to buy stocks, while September has shown the worst performance. Knowing when to hold or sell stocks depends on personal strategies, research, and confidence in the stock's potential for growth.

Do stocks go up or down in summer? ›

share prices tend to fall over the summer months as big traders go on holiday and sell high-risk assets. ... the end of a financial quarter or year can also see stock markets become quite volatile, with the share price of some companies reversing direction.

What is the stock market expected to do in 2024? ›

Fortunately, analysts see positive earnings and revenue growth for all eleven market sectors this year. The healthcare sector is expected to generate a market-leading 17.8% earnings growth in 2024, while the information technology sector is expected to lead the way with 9.3% revenue growth.

Is the stock market expected to go up in 2024? ›

1. Positive returns -- but smaller than in 2023. I think that the overall stock market will deliver positive returns in 2024. However, I expect those returns to be somewhat smaller than they were last year.

At what age should you get out of the stock market? ›

There are no set ages to get into or to get out of the stock market. While older clients may want to reduce their investing risk as they age, this doesn't necessarily mean they should be totally out of the stock market.

What is the most profitable month in the stock market? ›

NYSE Composite best and worst months over the last 10 years (2014-2023)
  • Best Months: April, June, July, October, November, and December.
  • Worst Months: January, February, March, August, and September are weaker periods.
Apr 1, 2024

What month do stocks go down the most? ›

Since 1928, the largest average decline in down months for the S&P 500 is a tie between May, September, and October at (4.7%).

What is the best day of the week to buy stocks? ›

One of the most popular and long-believed theories is that the best time of the week to buy shares is on a Monday. The wisdom behind this is that the general momentum of the stock market will, come Monday morning, follow the trajectory it was on when the markets closed.

Where will the S&P be in 2024? ›

Analysts expect overall S&P 500 earnings to rise 9.5% in 2024 after increasing around 4% in 2023, LSEG data showed.

What will the S&P 500 be in 2024? ›

The average Wall Street forecast calls for the S&P 500 to be at a level of 4,861 by the end of 2024.

What is the best investment in 2024? ›

11 best investments right now
  • High-yield savings accounts.
  • Certificates of deposit (CDs)
  • Bonds.
  • Money market funds.
  • Mutual funds.
  • Index Funds.
  • Exchange-traded funds.
  • Stocks.
Mar 19, 2024

What time of year do stocks go up the most? ›

April has historically been one of the best months of the year for the major stock indices. The S&P 500 has moved highest in April in 16 of the last 20 years (80%) and has an average gain of 2%. The NYSE Composite has the same statistics.

What day of the week do stock prices go up? ›

During a bull market, some say Fridays are best for buying because the stock market is most volatile and tends to fall the most then. On the other hand, Wednesdays and Thursdays are more likely to see stock prices rise.

How often do stocks go up? ›

The average stock market return is about 10% per year for nearly the last century, as measured by the S&P 500 index. In some years, the market returns more than that, and in other years it returns less.

What is the average return per month for the stock market? ›

Basic Info. S&P 500 Monthly Return is at 3.10%, compared to 5.17% last month and 3.51% last year. This is higher than the long term average of 0.56%. The S&P 500 Monthly Return is the investment return received each month, excluding dividends, when holding the S&P 500 index.

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