DIY Investor: Outlook 2024: Equity Strategy
2022 saw a classic bear market as interest rates started to rise. While rates continued higher in 2023, stocks recovered from their 2022 lows, and ended the year right at all-time highs.
For 2024, investors could see stocks move higher, but likely at a slower rate than in 2023. Several factors are at play that could result in stocks heading higher, but in a less obvious way than the 2023 bull market rally.
For starters, companies with higher debt levels may start to feel the pinch of higher interest rates. Companies with low amounts of debt to service and strong cash flows could fare much better.
That would reflect a rotation in the market. That’s healthy for a stock market rally over the long term. Such a rotation may have already started in the last quarter of 2023.
Globally, markets look more mixed going into the new year. The United States is showing declining inflation and a job market that’s holding up well.
However, in Europe, data points to a slowing economy. Potentially, it could even see a recession in the coming months. The same is true with China, which has been slowing internally, as its debt-laden real estate sector has weighed heavily there.
That suggests investors may get some contrarian opportunities in those global regions. But the best bet for 2024 is still the United States.