May 2024 defied the adage “sell in May and go away,” with the stock market staging a notable comeback after April’s losses. The S&P 500 delivered a return of nearly 5%—a positive sign for investor sentiment. This upswing was driven by several key factors.
Tech rebound, broad based gains
Technology stocks, which dominated headlines and performance in 2023, continued to be a focal point. May saw a resurgence in the technology sector, particularly in artificial intelligence or “AI” companies. This is evident by the 5.96% return seen in U.S. growth stocks for the month.
More importantly, May witnessed a welcome shift towards broader market participation. Outside of tech, sectors like utilities and communication services significantly outperformed—up over 9% and 6% respectively. Mid- and small-cap companies showed a strong rebound, posting gains of 4.39% and 5.04% respectively. Globally, foreign developed markets posted gains of 4.00% while emerging markets held steady, up 0.59%.
Earnings & interest rates: A balancing act
While the stock market experienced a positive turnaround, underlying concerns remain. Corporate earnings reports presented a mixed picture, with some companies failing to meet analysts’ expectations. This underscores the need for investors to look beyond the headline-grabbing sectors.
The Federal Reserve’s monetary tightening cycle continues to cast a shadow. The timing and extent of future interest rate hikes are primary concerns for investors, impacting market movements. May saw a slight decrease in bond yields, offering temporary relief as bond prices moved higher. The US aggregate bond index posted gains of +1.70% for the month. However, the trajectory of interest rates will continue to influence market volatility.
Economic growth: Uncertainties & opportunities
Despite the upbeat stock market performance, the economic picture remains nuanced. GDP growth forecasts for 2024 and 2025 are cautiously optimistic, albeit growth is expected to moderate in the next several quarters. Inflation, however, remains a persistent concern, potentially impacting consumer spending and corporate profitability. The Federal Reserve’s actions will significantly determine the future course of inflation. The next Fed meeting will be held in the second week of June.
The labor market, however, provides a bright spot. Low unemployment figures indicate robust economic activity. This translates to increased consumer spending which can further bolster economic growth. However, rising interest rates could potentially dampen business investment, impacting long-term economic prospects.
Conclusion
May 2024 was a month of cautious optimism in the financial markets. Stock markets recovered from April’s slump, but ongoing concerns regarding inflation and interest rates continue to influence investor sentiment. Diversification across asset classes, sectors, and geographies remains crucial for mitigating risk in this evolving economic landscape.
FAQs
May 2024 was a month of cautious optimism in the financial markets. Stock markets recovered from April's slump, but ongoing concerns regarding inflation and interest rates continue to influence investor sentiment.
What was the market recap in May 2024? ›
The markets: up
Global stocks were up in May. The S&P 500 notched a new all-time high in May and finished the month up 5.0%. Non-US and Canada developed markets returned 4.0%, while emerging markets gained a more modest 0.6%. Bonds saw mixed performance.
Is the stock market expected to go up in 2024? ›
As a whole, analysts are optimistic about the outlook for stock prices in 2024. The consensus analyst price target for the S&P 500 is 5,090, suggesting roughly 8.5% upside from current levels.
What is the S&P prediction for 2024? ›
Overall, Yardeni Research forecasts S&P 500 operating earnings at $250 in 2024, up 12% vs 2023. He puts them at $270 in 2025 (up 8%) and $300 in 2026 (up 11.1%). These figures compare with analysts' consensus forecasts of $244.70 in 2024, $279.70 in 2025 and $314.80 in 2026.
What was the S&P performance in May 2024? ›
The S&P 500 (GSPC) had its best month this year in May 2024, returning 4.9%.
Are we going into a recession 2024? ›
The S&P 500 rallied in the first half of 2024 as investors cheered resilient earnings growth and anticipated that aggressive Fed rate cuts were just around the corner. However, the New York Fed's recession probability model suggests there is still a 61.8% chance of a U.S. recession sometime in the next 12 months.
What is the Dow Jones forecast for 2024? ›
Dow Jones price prediction 2024: The Dow Jones price predictions range from 34,000 (-8.5%) to 45,000 (+20%), with most analysts saying more strength in '24 is likely.
Should I pull my money out of the stock market? ›
Key Takeaways. While holding or moving to cash might feel good mentally and help avoid short-term stock market volatility, it is unlikely to be wise over the long term. Once you cash out a stock that's dropped in price, you move from a paper loss to an actual loss.
What stock will boom in 2024? ›
Best stocks in 2024
| S.No. | Name | CMP Rs. |
|---|
| 1. | Man Infra | 191.15 |
| 2. | BLS Internat. | 430.70 |
| 3. | Black Box | 506.00 |
| 4. | RHI Magnesita | 576.95 |
22 more rowsConsensus earnings growth1 for EM in 2024 and 2025 is nearly 17% and 15%, respectively, compared to less than 11% and 14% in the United States. Attractive valuations: In our view, EM equity is one of the most mispriced asset classes globally, with valuations remaining very inexpensive compared to DM equity.
S&P 500 earnings growth to accelerate in the second half of the year. Full-year S&P 500 earnings growth of 11.4% in 2024. Full-year S&P 500 revenue growth of 5% in 2024.
What is the expected return of the stock market in the next 10 years? ›
Highlights: 5.2% 10-year expected nominal return for U.S. large-cap equities; 9.9% for European equities; 9.1% for emerging-markets equities; 5.0% for U.S. aggregate bonds (as of September 2023). All return assumptions are nominal (non-inflation-adjusted).
How much will S&P be worth in 10 years? ›
Stock market forecast for the next decade
| Year | Price |
|---|
| 2027 | 6200 |
| 2028 | 6725 |
| 2029 | 7300 |
| 2030 | 8900 |
5 more rowsAug 16, 2024
2024 stock market outlook
In fact, the Fed's monetary policy could be one of the biggest driving forces of market growth. Mukherjee says that interest rates are likely to fall through the year as the Fed becomes less hawkish and inflation continues to decline alongside moderate economic growth.
What was the Nasdaq performance in May 2024? ›
The Nasdaq-100 Index® (NDX®) was up 6.3%, marking the index's best month since November. The Nasdaq Ethereum™ (NQETHS™) was the best-performing index, surging by 27.7%, due to improved sentiment towards cryptocurrency post a landmark approval by SEC.
What is the return of the S&P YTD in 2024? ›
So far in 2024 (YTD), the S&P 500 index has returned an average 19.09%.
What was the market recap in May? ›
May market recap: AI, Inflation & beyond
Lower than expected inflation data reignited hopes for at least one, and maybe two Fed rate cuts in 2024. Headline CPI came in at 3.4%. This helped stocks and bonds bounce back from a poor month in April.
What is the economic forecast for 2024? ›
We foresee real GDP growth averaging 2.5% in 2024 and easing to 1.7% in 2025. Unmistakable labor market cooling: The soft July jobs report points to a deterioration in labor market conditions, in line with several other labor market indicators.
What did the market return last year? ›
S&P 500 Historical Annual Returns
| S&P 500 Index - Historical Annual Data |
|---|
| Year | Average Closing Price | Annual % Change |
|---|
| 2021 | 4,273.41 | 26.89% |
| 2020 | 3,217.86 | 16.26% |
| 2019 | 2,913.36 | 28.88% |
66 more rowsSome of the most significant stock market crashes in U.S. history include the crash in 1929 that preceded the Great Depression, the crash in 1987, known as Black Monday, the dotcom bubble crash in 2001, the 2008 crash related to the Financial Crisis, and the 2020 crash following the outbreak of COVID.
