Healthy Earnings Power the S&P To New Levels; Chances of a March Cut Remain

“I don't think you know how much you can do until you try.” ~ Chita Rivera (1933 - 2024)

Good evening,

This was an important week for markets, with myriad macroeconomic catalysts having their say. “We learned a lot this week,” Fundstrat Head of Research Tom Lee told us. “Our primary takeaway is that 2024 will be a challenging year, but ultimately positive — just as January had zig-zags, but ended up positive.”

To be specific, the S&P 500 ended up 1.59% for the month of January – an important signal, in Lee’s view. He and his team examined data from the past 74 years, finding 28 instances in which the prior year saw gains of 15% or more, as we just did in 2023. Of those 28 instances, January was a positive month in 13 of them. As our Chart of the Week shows, in these 13 historic analogs, the full-year return was positive 12 out of 13 times (92%), with a median full-year return at 16.3%. Remarked Lee, “This suggests that our 5,200 [year-end] target might be low. Based on this January barometer, the possible upside to our S&P 500 target could be as high as 5,500 or more.”