Jeremy Siegel sees stocks and home prices rising, interest rates dropping, and no recession in 2024.
The “Wizard of Wharton” expects value and small stocks to outpace the “Magnificent Seven” next year.
Siegel predicts the Fed will cut rates by five or six times to below 4% in 2024.
Stocks and house prices will jump, the economy will skirt a recession, and interest rates will tumble in 2024, Jeremy Siegel says.
“The Dow just surged to an all-time high,” the retired finance professor known as the “Wizard of Wharton” said during his keynote at VettaFi’s 2024 Market Outlook Symposium on Thursday. “The S&P is going to follow very soon,” he predicted, according to a post on VettaFi’s website.
The benchmark S&P 500 index has rallied 23% this year to trade at 4,720 points as of Thursday’s close — just 2% below its all-time intraday high of 4,819 points in January 2022. Its gains were driven by the “Magnificent Seven” this year, a group of Big Tech stocks that includes Tesla and Nvidia. But Siegel predicted the market would see a reversal in 2024, with value and small stocks rising by 10% to 15% to outperform large growth stocks.
The overall market also looks healthier to him now the frenzy around cryptocurrencies, non-fungible tokens, and fad stocks has faded.
“The speculation that the pandemic darlings like Peloton, some of the craziness in the crypto market, some of the craziness in the NFT market, that’s gone,” he said. “The quality growth stocks reasserted themselves, the Googles, the Nvidias, the Teslas, the Amazons.”
The senior economist at ETF-provider WisdomTree also issued a bullish outlook for the housing market. Mortgage rates have surged to two-decade highs as a result of the Federal Reserve hiking interest rates to crush elevated inflation. That has basically frozen the market, as prospective sellers who’ve locked in cheap mortgages are loath to list their homes, while buyers are balking at paying top dollar and taking on much larger monthly payments than they wanted.
“I would imagine we could have a rise in housing prices of 4% or 5% in 2024,” Siegel said, likely because he expects interest rates to fall, reducing mortgage rates and freeing up cash to spend on homes.
“I think we may have five or six rate cuts,” Siegel said about the outlook for next year, basing his prediction on inflation slowing and commodity prices dropping in recent months. His comment suggests the Fed could lower its benchmark rate from upwards of 5.25% today to below 4% in under a year.
Siegel also expressed surprise at how the American economy has kept growing solidly despite the Fed’s hikes, and said that could mean it escapes a recession entirely.
“The indications for a soft landing are certainly increasing and I would say are odds on now for 2024,” he said.
Siegel, the author of “Stocks for the Long Run,” is frequently bullish on the stock market’s prospects, but his optimistic outlook for this year proved prophetic.
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