The Zhitong Finance APP noticed that by this time last year, the stock market's upward momentum even exceeded the most optimistic expectations, and Wall Street forecasters were convinced that it could not maintain such a dazzling pace.

As a result, with strategists from Bank of America, Deutsche Bank, Goldman Sachs, and other major companies issuing predictions for the outlook of 2024, a consensus is gradually forming: after the breakthroughs in AI led to a boom in Technology Stocks, and the economy continued to challenge the pessimists' prophecies, resulting in the S&P 500 Index soaring over 20%, the S&P 500 Index may only see a slight increase in 2024. With the Federal Reserve shifting to interest rate cuts, the time for US Bonds to compete with the stock market is seen as ripe.

What followed made Wall Street's forecasters look foolish again; since the end of the pandemic, they have been blindsided by market fluctuations.

In 2024, stock prices not only did not lose momentum but continued to soar. By the end of December, the S&P 500 Index had already exceeded the year-end average target set by strategists. Subsequently, the index set new historical highs one after another and is expected to achieve a 25% increase in 2024, marking the strongest consecutive annual gain since the dot-com bubble in the late 1990s.

Julian Emanuel, Chief Equity and Algo Strategist at Evercore ISI, stated, "There is an element of miracle in this." He abandoned his forecast of a slight decline for the S&P 500 Index halfway through the year and became the first among major strategists to propose a year-end target of 6000 points. "Trends can last longer and go further than people expect."

Even the most optimistic forecasters did not anticipate such significant growth in 2024.

The continuation of this trend proves that the post-pandemic economy is still steadily expanding, even after the Federal Reserve pushed interest rates to the highest levels in over twenty years, which has surprised forecasters.

As 2023 comes to a close, the bond market has risen sharply due to speculation that central banks will need to start significantly loosening policies, with fixed income strategists predicting that the benchmark 10-year US Treasury yield will drop to around 3.8% by the end of the year. However, that has not been the case, and the yield has risen above 4.6%.

Strong economic performance has driven the stock market up and gradually benefited corporate profits. Meanwhile, enthusiasm for AI has continued to drive up the stock prices of major technology companies like Alphabet, Amazon, Apple, Meta Platforms, and NVIDIA. Trump's victory in the presidential election, along with promises of tax cuts and pro-business policies, further supported the rise in the stock market.

Highly concentrated weights.

This outcome has largely extinguished bearish sentiment on Wall Street and prompted some strategists to abandon their pessimistic views and give in.

Mike Wilson of Morgan Stanley had issued a series of warnings in 2023, predicting a downturn in the stock market, but by May of this year, he turned bullish on the stock market. Marko Kolanovic of JPMorgan left JPMorgan after 20 years in mid-2024. Kolanovic had predicted a 12% drop in the S&P 500 Index by December. By the end of November, Dubravko Lakos-Bujas, the current head of JPMorgan's market research team, abandoned previous bearish targets and predicted that the S&P 500 Index would continue to rise next year.

Lakos-Bujas stated that some mistakes made by the team reflected the difficulty in predicting the surge of the so-called "Seven Sisters" of Technology stocks, which account for a significant part of the S&P 500 Index's gains. However, he mentioned that there are ample reasons for this optimism, such as the Fed's easing policies, power shifts in the White House, and China's desire to maintain economic growth.

Lakos-Bujas stated, "We actually have three adjustments." He expects the S&P 500 Index will rise to 6,500 points next year, which is about a 9% increase from Friday's levels. This "has changed the way we think about risk assets and stocks."

It is not just the pessimists who were caught off guard. This year, after the S&P 500 Index surpassed its target, nearly every top strategist tracked by Bloomberg has raised the S&P 500 target at least once.

When the S&P 500 Index target was first announced at the end of 2023, even the most optimistic forecasters at the time—Fundstrat's Tom Lee and Oppenheimer's John Stoltzfus—only expected the S&P 500 Index to rise about 9%, to 5,200 points, yet the index surpassed this level in less than three months.

The stock market did experience a pullback at one point, but this reversal proved to be short-lived. Although the S&P 500 Index declined from mid-July to early August, it quickly regained upward momentum as concerns about technology companies' earnings faded. The sell-off triggered by Fed Chairman Powell's hawkish statements this month also reversed rapidly.

Of course, the sharp rise in stock prices has raised concerns for some that valuations have become too high. This is particularly serious for companies related to AI, as there is uncertainty about whether the technology can deliver on its promises. The market's embrace of a Trump victory ignores the risks posed by his tariffs and tax cuts, which could reignite inflation and hinder global trade.

However, few are calling for an end to this frenzy. In fact, among the 19 strategists tracked by Bloomberg, none expect the S&P 500 Index to decline next year. Even the lowest predictions suggest the benchmark will remain stable; the most optimistic index is at 7,100 points, indicating a 19% gain.

The S&P 500 Index has recorded an annual ROI of at least 20% for two consecutive years.

Deutsche Bank's chief US stocks and Global strategist Binky Chadha has been one of Wall Street's bullish advocates for the past three years. He is most optimistic about a target of 7000 points by 2025, reflecting his expectations of sustained economic growth and low unemployment. He claims that he is not worried about missing opportunities.

He stated that predicting the market means "looking year by year." "Typically, the stock market will correct by 3% to 5% every two to three months. Does that mean you shouldn't buy stocks? No, you should buy because they will rebound."