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Daily Spotlight: Argus’ S&P 500 Forecast for 2024

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Roper Technologies, Inc. (ROP) Stock Forecasts

AllMarket Outlook

Argus•January 02, 2024

Market Outlook

Neutral – Short term

Summary

In the 40-plus years since Ronald Reagan became president, stocks have logged positive annual performances almost 80% of the time. The average annual gain has been 11%. Last year was abnormal, as the S&P 500 was up almost 25% for the year before dividends, having entered a new bull market in June. We note that the U.S. market has not had a “normal” year since 2016, with five years of above-average market returns and two negative years. Domestic investors also endured two bear markets and one pandemic-induced recession during this period. As we look to 2024, we see a stock market that is more likely to generate normal returns. We expect an uneventful start in 1H24, as interest rates and inflation steadily mover lower and earnings growth picks up. By mid-year, barring a recession, which we do not expect, stocks could be trading at record highs. Then the focus will turn toward the U.S. presidential election and volatility may pick up. Our research shows that since 1980, the fourth year of a presidential cycle has been the most challenging for the S&P 500, though we note much of the weakness can be attributed to one year (2008, when the subprime mortgage crisis slammed the financial sector in the middle of the Great Recession). At this time, the U.S. financial industry is much healthier and we estimate that an expanding economy, growing earnings, and declining inflation and interest rates might offset political uncertainty, resulting in the S&P 500 ending the year in the black. Our formal price target for the S&P 500 in 2024 is 5200, about 9% above current levels, for a more-normal year.

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Technical Assessment: Neutral in the Intermediate-Term

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