The confusion and guesswork on where 2024 is headed is understandable — there’s a lot happening. The U.S. economy remains extremely strong even as China’s economy continues to slow. Shipments through the Red Sea are being disrupted by militant attacks at the same time that demand for commodities is growing. Treasury yields are marching higher once again as expectations for interest rate cuts wane. Simultaneously, Q4 2023 earnings reports that we’ve seen so far have been a mixed bag. All of this has equities moving in fits and starts to begin the year. Three weeks into January and the benchmark S&P 500 index is up less than 1%, the Nasdaq is up nearly 3% and the Dow Jones Industrial Average is down less than 1%. While where we go from here is likely anyone’s guess, here are three stock market predictions for 2024.
Crypto ETFs Surge
JPMorgan Chase just came out with a research report where it forecast that the new batch of Bitcoin (BTC-USD) exchange-traded funds (ETFs) will attract as much as $36 billion of capital from investors this year. What’s interesting is that JPMorgan’s prediction is on the conservative side. More bullish analysts are expecting $100 billion to flow into the ETFs throughout 2024. The Bitcoin ETFs are off to a good start, with $1.90 billion invested in their first week of trading.
The big winner of the Bitcoin ETFs so far has been BlackRock (NYSE:BLK). The firm’s Bitcoin fund has become the first among nine similar ETFs to reach $1 billion of assets under management (AUM). About half the capital allocated to the BTC ETFs so far has gone into BlackRock’s iShares Bitcoin Trust ETF (NASDAQ:IBIT), which began trading on January 12 after receiving regulatory approval from the U.S. Securities and Exchange Commission (SEC). Next up is expected to be Ethereum (ETH-USD) ETFs this summer.
The IPO Market Rebounds
News just broke that social media platform Reddit is preparing to hold its initial public offering (IPO) in March of this year. Previous funding rounds left Reddit’s value at $10 billion, which could make it the first big IPO of the year. It will also be the first IPO from a major American social media company since Pinterest’s (NYSE:PINS) market debut in 2019. Reddit has been wanting to hold its IPO for years. However, it was repeatedly delayed due to the pandemic and 2022 bear market.
Reddit may be the first of a number of companies to hold IPOs in 2024. Days before the news emerged of Reddit’s plans, Adena Friedman, the CEO of the Nasdaq stock exchange, said in media interviews that close to 100 companies have filed confidentiality to hold IPOs this year. Friedman anticipates a major rebound for the IPO market in 2024. This would be welcome news, as the last two years were the slowest period for IPOs in 40 years. Only 15 technology IPOs were held between 2022 and 2023, down from 121 deals in 2021 amid a raging bull market, according to Nasdaq data.
Rate Cuts Happen In The Summer
Atlanta Federal Reserve President Raphael Bostic has said that the U.S. central bank is unlikely to start cutting interest rates until the third quarter of this year. Bostic and others are trying to dampen expectations that rates will begin moving lower when the Fed meets in March. The management of expectations appears to be working based on the current bets of futures traders and Treasury yields.
Futures traders predict a 50% chance of a 25-basis point rate cut from the Fed in March. That’s down from as high as 81% on January 12. The declining odds come after a series of strong economic data in recent days, including December retail sales that were stronger than expected. Markets are also pricing in a reduction in U.S. interest rates of 140 basis points this year. That’s down from 175 basis points a few weeks ago. The reassessment has pushed the yield on the benchmark 10-year Treasury note back above 4%, pressuring stocks.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
