Fed Signals Rate Cuts Coming in 2024, Stocks Could See Double-Digit Gains But Valuations Remain Stretched
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The Federal Reserve is signaling interest rate cuts in 2024 after aggressively hiking rates in 2022 to fight inflation.
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Historically, stocks have posted double-digit gains in the 12 months after the end of a rate hike cycle as cuts spur growth.
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The Dow, S&P 500, and Nasdaq returned medians of 17%, 16%, and 20.1% respectively after past rate hike cycles ended.
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Analysts expect accelerating revenue and earnings growth for the S&P 500 in 2024, which could lift stocks.
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However, stocks currently trade at elevated valuation multiples compared to historical averages, so investors should be cautious.