Stocks Could Go Higher This Year: Siegel
"I am more optimistic than I was just a few months ago," the Wharton economist said Tuesday.
The stock market could move higher by year-end despite its already strong showing in 2023, economist Jeremy Siegel said Tuesday.
“We’ve had a strong year so far, but I think we may see another 5% rise in the markets to close the year,” the Wharton School emeritus finance professor wrote in his weekly column for WisdomTree, which he serves as senior economist.
“The pressure from the Fed is decreasing, and the economic data and profits are coming in nicely,” Siegel continues.
“Certainly, some geopolitical pressures could re-assert and we have one of strangest presidential races in our history forthcoming — the majority of each party doesn’t like the presumptive choice. Anything can develop that could throw this forecast off track. But I am more optimistic than I was just a few months ago.”
Taken together, recent economic data points, including employment, housing demand and money supply, look good for corporate profits, according to Siegel.
Estimated 2024 S&P 500 profits are higher now than they were a month ago — “that’s a rare event because normally analysts are overly optimistic and the estimates trend down as time goes on. That means the economy is stronger than expected and productivity is helping profits,” the economist wrote.
The Fed and markets should be pleased with the big batch of economic data released last week and the economy’s underlying health, Siegel said.
Among other data analyses, he noted that while official hiring numbers looked low, including a 110,000 downward revision to past data, “the revisions were likely due to strikes and the closure of a large trucking firm. Many of those workers will be rehired eventually.”
A one-tenth increase in hours worked means the jobs report was not overly weak but it confirms a downward trend in the pace of hiring, according to Siegel, who also noted what he called a welcome jump to pre-pandemic labor market participation rates.
“More people in the labor force shows slack in the labor market that helps mitigate concerns for the Fed about wage inflation pressures and allows the Fed to hopefully not hike rates any further,” he added.
Pictured: Jeremy Siegel