7 Market, Economic Predictions for 2024: Schwab

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Top market strategists from Charles Schwab recently shared their thoughts on this year’s market developments and offered several predictions and recommendations for 2024.

Schwab, in its 2023 outlook, had expected some distinction between the year’s two halves, with the first half looking difficult and the second looking brighter, Chief Investment Strategist Liz Ann Sonders noted in a webcast.

“What ended up happening was we had distinct halves within halves,” she said, explaining the first half started strong, then became more difficult with the banking mini-crisis, while the second half started tough with a market correction.

Since then, Sonders noted, “we’ve had a much better path for equities.”

Schwab also expected the average stock to do better in 2023, and they did start the year off well, until the mini banking crisis, which drove a very concentrated market, she said.

“But now as we’re winding the year down over the past six weeks or so you’ve seen a massive improvement by the average stock, by small caps, by equal weight,” Sonders said. “It just was bookended at the beginning of the year and at the end of the year.”

Kathy Jones, chief fixed income strategist, said Schwab correctly anticipated that as the Federal Reserve raised rates, the yield curve would stay inverted. “And that did happen,” she said, “although at much higher levels than we had anticipated for the peak in rates.”

The big surprise, she added, given the pace and magnitude of the Fed’s rate hikes, was that there was little to no deterioration in credit in 2023, Jones added.

Jeffrey Kleintop, chief global investment strategist, said he had counted on outperformance for the average international stock in 2023, which did happen, but it’s hard to see in the cap-weighted indexes “given how concentrated the U.S. is in just a handful of AI-driven tech stocks.”

He sees it as “the start of a new cycle of outperformance by international” stocks versus U.S. equities.

China’s “reopening flop” after its COVID-19 lockdown came as a surprise in 2023, Kleintop said, citing property developer problems, a plunge in consumer spending and the global manufacturing recession that weighed on the country’s growth.

Check out the gallery for seven predictions on markets and th economy from Schwab strategists for 2024.

Images: Adobe Stock

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