Goldman Sachs has provided a bullish outlook for the U.S. stock market in 2024, forecasting a 5% gain in the S&P 500 index with an anticipated market valuation maintaining a price-to-earnings ratio of 18 times. The investment bank's projection, revealed on Thursday, is grounded in expectations of stable corporate earnings and a modest economic expansion that could alleviate recession concerns.
The firm anticipates the broader market to deliver a total return of approximately 6%, which is slightly below the typical average seen in presidential election years. This outlook is based on the premise that early robust economic growth might lead to reassessments of Federal Reserve rate cuts beginning in the second quarter of the year. While uncertainties surrounding the presidential election may initially dampen risk appetite, these are expected to subside as the year unfolds, potentially boosting U.S. equity prices.
In addition to its market forecast, Goldman Sachs has identified three key investment strategies for investors to consider:
- Concentrate on quality stocks such as Alphabet (NASDAQ:GOOGL), O'Reilly (NASDAQ:ORLY) Automotive Inc. (NASDAQ:ORLY), Church & Dwight Co., Inc. (NYSE:NYSE:CHD), and Accenture plc (NYSE:NYSE:ACN).
- Invest in high Return on Invested Capital (ROIC) growth stocks like NVIDIA (NASDAQ:NVDA), Enphase Energy Inc . (NASDAQ:ENPH), ServiceNow Inc. (NYSE:NYSE:NOW), Eli Lilly and Company (NYSE:NYSE:LLY), and Albemarle Corporation (NYSE:NYSE:ALB).
- Explore undervalued cyclicals including Toro Co (NYSE:TTC), Alaska Air Group, Inc. (NYSE:NYSE:ALK), Delta Air Lines, Inc. (NYSE:NYSE:DAL), Crocs , Inc. (NASDAQ:CROX), and John Bean Technologies Corp . (NYSE:NYSE:JBT).
Additionally, diversification across Information Technology, Health Care, and Energy sectors is advised to capitalize on potential growth opportunities.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.