The year 2024 is shaping up to be a historic one for Wall Street, with the S&P 500 index reaching new all-time highs and surpassing 5,400 points, representing an impressive 13% increase since January. Despite facing obstacles such as high interest rates, geopolitical tensions in regions like Israel and Ukraine, and ongoing concerns about inflation, the American market has shown remarkable resilience.
Following a decline in April due to worries about these challenges, Wall Street rebounded by an impressive 9% after positive financial reports from companies were released during the first quarter of 2024. A recent analysis by FactSet showed that an astonishing 79% of companies in the S&P 500 index exceeded analysts’ profit forecasts during the first quarter. This rate is higher than the historical average of 74% over the past decade.
Notable sectors that outperformed expectations include communication services and technology, with companies like Meta, Google, Netflix, Nvidia, Microsoft, and Apple driving profitability. Analysts remain optimistic about the opportunities ahead and have given 55% of recommendations to buy. FactSet’s projections suggest that the S&P 500 index could reach a remarkable 5,900 points by next year, representing an incredible increase of 9%.
However, despite this positive outlook, the US stock market remains expensive with a price-to-earnings ratio of 20.7, which is above the five-year average of 19.2. Only 29 companies expressed concerns about a potential slowdown in the American economy; past trends show that these warnings typically follow economic downturns rather than predicting them.
Overall, this reporting season has been viewed as a test of Wall Street’s rally and it has passed successfully based on current data suggesting that the American economy is showing strength and resilience amidst challenging conditions.
