Where Is Wall Street Most Optimistic on Ratings for S&P 500 Companies Heading Into 2024?

In terms of sector-level ratings, analysts are most optimistic about the Energy (64%) and Communication Services (62%) sectors, as these two sectors have the highest percentages of Buy ratings.

The energy industry is expected to have a positive outlook in 2024. Global energy consumption will grow by 1.8% in 2024, largely driven by strong demand in Asia. Despite still-high prices and unsolved supply chain disruptions, demand for fossil fuels will reach record levels, and demand for renewable energy will rise by 11%, according to Economist Intelligence.

On the other hand, analysts are most pessimistic on the Consumer Staples (47%) and Industrials (49%) sectors with the lowest percentage of Buy ratings. The Consumer Staples sector also has the highest percentage of Hold ratings at 46%, while it is tied for the highest percentage of Sell ratings at 7%.

J.P. Morgan estimates that excess liquidity and cash-like assets among U.S. households have fallen from $3.4T to $1T and should mostly be exhausted by Q2 2024.

Dubravko Lakos-Bujas, Global Head of U.S. Equity and Quantitative Strategy at J.P. Morgan, warns of a challenging macro backdrop for stocks next year with softening consumer trends if there is no rapid Fed easing. In such a scenario, investor positioning and sentiment could reverse.

The ten S&P 500 companies with the highest percentages of Buy ratings and Sell ratings can be found below.