{"id":89579,"date":"2024-02-02T20:46:58","date_gmt":"2024-02-03T01:46:58","guid":{"rendered":"https:\/\/ifintechworld.com\/?p=89579"},"modified":"2024-02-02T20:47:02","modified_gmt":"2024-02-03T01:47:02","slug":"would-a-2024-recession-be-dire-for-stocks-why-citi-expects-sp-500-earnings-to-climb-next-year","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=89579","title":{"rendered":"Would a 2024\u00a0recession be \u2018dire\u2019 for stocks? Why Citi expects S&#038;P 500 earnings to climb next year."},"content":{"rendered":"<div id=\"js-article__body\" itemprop=\"articleBody\" data-sbid=\"WP-MKTW-0002767413\" role=\"document\">\n<p>S&amp;P 500 earnings can turn higher in 2024 even with lingering macroeconomic concerns that have some economists anticipating a recession next year, according to equity analysts in Citigroup\u2019s research business.<\/p>\n<p>Citi Research projects that the S&amp;P 500\u2019s earnings per share may increase to around $245 next year, up about 11% from its current 2023 estimate, said Scott Chronert, head of U.S. equity strategy at Citi Research, in a phone interview Tuesday. He said EPS can climb to that level despite Citi economists anticipating a potential economic recession in 2024.<\/p>\n<div class=\"paywall\">\n<p>\u201cA two-quarter recession does not need to be as dire of an outcome as commonly perceived,\u201d said Chronert. \u201cOur view allows for a rolling earnings recession over the past two years for the S&amp;P 500.\u201d\u00a0<\/p>\n<p>In July, Citi\u2019s equity analysts raised their price target for the S&amp;P 500 to 5,000 for mid-2024, citing increased chances for a \u201csoft landing\u201d for the U.S. economy. Citi has not yet released an S&amp;P 500 price target for the end of next year, Chronert said.<\/p>\n<p>The percentage of companies in the index with positive year-over-year earnings growth appears set to rise in 2024, possibly to a 20-year high based on consensus estimates, according to a U.S. equity strategy note from Citi dated Nov. 24.<\/p>\n<div data-layout=\"inline\n                \" data-layout-mobile=\"\" class=\"\n          media-object\n          type-InsetMediaIllustration\n            inline\n  article__inset\n          article__inset--type-InsetMediaIllustration\n            article__inset--inline\n  \"><\/p>\n<p>          <!-- eventually when we know what this card will be we can change it and leave this one --><\/p>\n<figure class=\"\n        media-object-image\n        enlarge-image\n        img-inline\n        article__inset__image\n      \" itemscope=\"\" itemtype=\"http:\/\/schema.org\/ImageObject\"><\/p>\n<\/figure><\/div>\n<p>Citi expects that after \u201ctwo years of EPS nothingness,\u201d the S&amp;P 500\u2019s earnings per share should expand in 2024, according to the note.\u00a0<\/p>\n<p>\u201cFundamentals in aggregate have been trading sideways,\u201d Chronert told MarketWatch, describing the index\u2019s EPS over the past two years as \u201cflattish.\u201d<\/p>\n<p><strong>Read:<\/strong> These ten stocks, not just from tech, are the key to next year\u2019s S&amp;P 500 earnings growth<\/p>\n<p>Meanwhile, Citi\u2019s economists have forecast a potential recession in the second and third quarters of 2024, Chronert said. Macroeconomic concerns include the Federal Reserve\u2019s interest rate hikes aimed at slowing the economy to bring down inflation to 2%, which may weigh on consumer spending, he said.\u00a0<\/p>\n<p>\u201cIf we do hit a recession in 2024, we don\u2019t expect to see a significant deterioration of index fundamentals like we have seen in recent crises,\u201d Citi\u2019s equity analysts said in the note, referring to the widely followed S&amp;P 500 benchmark for U.S. stocks.<\/p>\n<p>\u00a0\u201cA higher EPS floor likely creates a more manageable index drawdown,\u201d they said. \u201cIf fundamentals continue to prove resilient, investors should buy pullbacks.\u201d<\/p>\n<p>In the rolling earnings recession Chronert says he has observed over the past two years, growth stocks have been the first to make an exit after leading the way into it, according to Citi. Cyclical and defensive stocks have continued to see EPS contract year over year, according to the note.<\/p>\n<p>\u201c2024 is setting up differently,\u201d Citi\u2019s equity analysts said.\u00a0<\/p>\n<p>Citi expects to see fewer stocks with significant EPS declines of 25% or more next year compared with 2023 and the five-year average seen before COVID-19, the note shows.\u00a0<\/p>\n<p>Chronert also pointed to an expected \u201csurge\u201d in the distribution of the S&amp;P 500\u2019s EPS growth in the ranges of\u00a0 0%- 5%, 5%-10% and 10% \u2013 15%, as seen in the chart below.<\/p>\n<div data-layout=\"inline\n                \" data-layout-mobile=\"\" class=\"\n          media-object\n          type-InsetMediaIllustration\n            inline\n  article__inset\n          article__inset--type-InsetMediaIllustration\n            article__inset--inline\n  \"><\/p>\n<p>          <!-- eventually when we know what this card will be we can change it and leave this one --><\/p>\n<figure class=\"\n        media-object-image\n        enlarge-image\n        img-inline\n        article__inset__image\n      \" itemscope=\"\" itemtype=\"http:\/\/schema.org\/ImageObject\"><\/p>\n<\/figure><\/div>\n<p>The U.S. stock market is up this year, with the S&amp;P 500 rising 18.6% through Tuesday, after tumbling 19.4% in 2022. The index<br \/>\n        SPX<br \/>\n       closed 0.1% higher on Tuesday at around 4,555, according to FactSet data.<\/p>\n<p>\u201cThe bottom falling out of S&amp;P 500 EPS is a tail risk,\u201d said Citi analysts. \u201cA more resilient fundamental backdrop should support a higher equity floor even if sentiment and multiples sour.\u201d<\/p>\n<p>Meanwhile, BofA Global Research expects a \u201csoft landing\u201d for the U.S. economy next year and that the S&amp;P 500 will finish 2024 at 5,000, according to Savita Subramanian, BofA\u2019s head of U.S. equity and quantitative strategy. The S&amp;P 500\u2019s EPS probably has already \u201ctroughed,\u201d she said Monday during a media briefing on BofA\u2019s 2024 outlook.<\/p>\n<p><strong>See:<\/strong> S&amp;P 500 may rise 10% by end of 2024 amid worries that small-cap stocks \u2018can\u2019t hack\u2019 higher rates, says BofA<\/p>\n<\/p><\/div>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.marketwatch.com\/story\/would-a-2024recession-be-dire-for-stocks-why-citi-expects-s-p-500-earnings-to-climb-next-year-e8d4587e?mod=markets\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>S&amp;P 500 earnings can turn higher in 2024 even with lingering macroeconomic concerns that have some economists anticipating a recession next year, according to equity analysts in Citigroup\u2019s research business. Citi Research projects that the S&amp;P 500\u2019s earnings per share may increase to around $245 next year, up about 11% from its current 2023 estimate, [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":89580,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-89579","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Would a 2024\u00a0recession be \u2018dire\u2019 for stocks? 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