Yahoo Finance ‘401(k) Lady’ Jeanne Sutton: 7 Things To Watch For in the Stock Market for 2024
Jeanne Sutton, informally known as the “401(k) lady,” is a popular financial personality with over 1.5 million subscribers to her YouTube channel. She is also a CFP and CPFA with Strategic Retirement Partners, giving her a pedigree that some of her fellow YouTubers sometimes lack.
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In a YouTube broadcast in early January, Sutton gave her outline of what to watch out for in terms of the stock market’s performance for the rest of 2024. Here are the seven factors Sutton says may potentially affect stock market returns throughout the year.
Also see what Jaspreet Singh said about the 2024 market.
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The Economy
The economy typically has the single biggest effect on share price performance. After all, even though trading stocks online can feel like a game sometimes, the companies behind the stock symbols are real-world businesses. Their valuations are constantly affected by their revenue, expenses and growth rates, which in turn are reflected in the overall economy.
For now, Sutton says the Fed is looking like it’s pulling off the impossible, guiding the economy from “red hot” to “soft landing.” If that is indeed the case, it’s a great backdrop for a rising stock market.
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The Presidential Election
According to Sutton, the presidential election later this year could bode well for the market. Since 1952, the stock market has never been down during a presidential election year, so history seems to be on the side of higher prices. The market also has tended to respond positively to having a “known” candidate, regardless of political party.
So, if the final matchup ends up being Donald Trump vs. Joe Biden, no matter how you personally feel about the choices, the market likely may see it as a positive.
Consumer Debt Levels
A lot of noise has been made in the press about how consumer debt levels broke $1 trillion for the first time in 2023. But, according to Sutton, personal balance sheets seem to be holding up.
However, if defaults and delinquencies jump at the same time that interest rates and debt levels are high, it could sound a warning note. Sutton also says the resumption of student loan payments is still a question mark in terms of how it will affect consumers and their budgets, so that’s something to keep an eye on as well.
Artificial Intelligence Stocks
Companies such as Nvidia were on fire in 2023, but Sutton thinks they can continue their run. This is based primarily on the idea that as their cost of borrowing drops — thanks to falling interest rates — they can invest even more cash into research and development. This, in turn, should help them keep their competitive edge. Technology stocks in general tend to perform better when interest rates are falling, and AI stocks are no different.
Interest Rates
The stock market is already anticipating that the Fed will start cutting rates in 2024. According to Sutton, 3-4 cuts are already baked into the market. The question on everyone’s mind: Will the Fed live up to market expectations? Will they come up short? Will they exceed them?
Anything that differs from what the market expects tends to rile markets, either higher or lower. This makes the Fed’s interest rate policy important to consider when devising your own market expectations in 2024.
Stocks Outside the Magnificent Seven
Much has been made in the press about the so-called “Magnificent Seven” stocks: Nvidia, Microsoft, Apple, Meta, Amazon, Alphabet and Tesla. What you may not know, however, is that if you took just these seven stocks out of the S&P 500 in 2023, the market index actually would have posted a negative return.
The question for 2024: Will the rally broaden out to include the remaining 493 stocks? Or will market returns remain concentrated? Sutton has no answer for this, but she advises that it’s something to watch in 2024.
Exogenous Factors
Exogenous factors that are not entirely economic in nature always stand the chance of upsetting the markets. These so-called “black swan” events can strike at any time, in any year, but predicting them is impossible.
As Sutton explains, currently there are two wars going on in the world, and there’s no way of knowing whether additional ones will break out. The coronavirus pandemic was the ultimate “black swan,” but whether such an event will occur again is pure speculation.
The bottom line is that even in the event of devastating weather conditions or natural disasters, which can be predicted in a very general sense, knowing how calamitous they will be or exactly where they will strike is always a guessing game.
The Bottom Line
Add it all up and Sutton says that cautious optimism is in order for 2024. However, if any of her “things to watch” take a negative turn, they could help drag the market down with them.
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This article originally appeared on GOBankingRates.com: ‘401(k) Lady’ Jeanne Sutton: 7 Things To Watch For in the Stock Market for 2024
