As trading started for the week spanning January 29 to February 2nd, stock indices in the United States are manifesting a rarely-seen signal which, in previous instances, resulted in bull runs and strong returns.
Overall, January 2024 has been very positive all around for stocks – a very rare occurrence for an election year. Indeed, analysts for CFRA Research point out that a positive January for markets in any given election year has only happened in 11% of all such periods.
The S&P 500 is considered the barometer in this case: if it crosses the 11% threshold, then stocks will end up higher by around 15.6% on average throughout the year. Likewise, there is practically a 100% guarantee of gains all around.
Here Comes the Rally
As of press time, the S&P 500 has already risen by 3.2% since January 2nd, the first trading day of 2024. If it goes up by the wonted 15%, it would hit 5,629 – considerably greater than the total expected by many analysts for the year. Indeed, the likes of Bank of America, BMO, Deutsche Bank, and Goldman Sachs feel that gains may only go as high as 10%.
Considering this, several fields that are considered hot commodities may find themselves with even greater returns as the year progresses. Communications, financial stocks, and information technology are the sectors that could strike serious gold, posting returns of over 20%, and generally outperforming all other sectors.
However, analysts still advise caution as it is possible that the S&P 500 still has a high risk of correction, potentially up to 20%, given how stocks have recovered well over the past four weeks. This is despite the way the index has recovered from virtually all of its losses from the bear market of 2022.
