Prepare for a choppy year

Question: How is the stock market expected to perform in 2024?

Phil Orlando: We're expecting a constructive year for the stock market in 2024. We think the S&P 500 will end 2023 at about 4,600, and we're expecting roughly an 8 to 9% increase over the course of the year to 5,000 by the end of calendar '24. But it's going to be a choppy year. We think the first half of the year will be strong based upon the perception that the Federal Reserve has paused its interest rate hiking cycle. We think the late summer and early fall could be choppy relating to the presidential election. We think we'll have a powerful end-of-year-rally based upon those election results. In terms of sectors, technology stocks clearly dominated the first part of calendar '23. So we think that rally is going to broaden out over the course of calendar '24. Domestic large-cap value stocks, small-cap growth stocks, and international stocks we think will do well. We think Treasuries will perform well in the fixed-income market and cash is a real asset class again.

Question: How are elections and the markets historically related?

Orlando: Over the course of the last century, there's been a significant symbiotic relationship between the financial markets and presidential elections. Looking back over the last 24 presidential elections, the performance of the stock market in the three months leading into the election, August, September, October, if the stock market is negative in those three months, the incumbent has lost his bid for reelection 88% of the time. As we look at the current president's polling numbers, which frankly aren't particularly good, that would suggest that we may see some choppiness in the stock market during the August-September-October period, if in fact the stock market believes that a change in leadership is coming in the White House in November of 2024.