Market Outlook for the first half of 2024

Written Dec 18th, 2023

Updated: December 23, 2023


Published Dec 26th, 2023




 Re-cap of 2023


Let's quickly look back to December 22, 2022, when we released our 2023 first-half outlook.


In Dec of 2022, I made some projections that did not match what many people saw on cable business news or read in some newspapers. I did not see a recession in 2023 and was upbeat about the stock market and the economy. Finally, I believed the Federal Reserve would pause on rate hikes in late summer with only one interest rate increase in the later part of 2023.


My most significant concerns for 2023 were the Federal Reserve and rate increases, growing credit card debt, and the potential for a weakening economy later in 2023. I expected a minor 15% correction in the first half of 2023. It ended up coming in mid-July and August as investors took profits from the run-up in the stock market.


As we entered 2023, I felt the market would do well, and I even named three stocks we recommended for our clients. Our recommendation to clients was adding Meta, up about 200% for 2023, Google, up almost 60%, and Tesla, up over 100%. In addition to those three, we added funds to several existing positions within client portfolios and two new stocks to client profiles.


Approximately $5 trillion was sitting on the sidelines in 2022, and that amount did not change much in 2023. As the Federal Reserve raised interest rates, investors could purchase bonds like the US Treasury and CDs for about 5% to 5.8% in short-term durations.


We did take advantage of the higher yields and placed excess cash in bonds, money markets, and CDs to portfolios, but as we approach 2024, those rates are coming down substantially.


I believed 2023 would be a grind, but we would end 2023 on a positive note. As we approach the last four days of trading for 2023, investors who invested in the S&P 500, Nasdaq Comp Index, Growth Mutual funds, and a selection of stocks were rewarded with solid double-digit returns.


What will 2024 bring?



Closing out 2023 with the 5 Top and Bottom Performing Sectors for ETFs


Technology, Large-cap Cap Growth, Communications, Latin America, and Consumer Cyclical dominated the year.


These sectors ranged from returns in the 19% range for Consumer Cyclical and, to no surprise, 33% or better for technology.


China Region, Utilities, Health, Long Government Bonds, and Commodities Broad Basket rounded out the bottom stocks.


The sectors representing the bottom 5 were commodities at -3 % to -12 % for China Region ETFs. (China, Utilities, Health, Long Government Bonds, and Commodities Broad Basket ETFs)


Each sector has funds that either outperformed or underperformed the averages.


For example, the SPDR Technology ETF symbol  XNTK is up about 69% YTD, which can explain why technology was a top performer, but in 2022, the same ETF was down 41%. As you can see, this is why diversification is so essential to planning. Also, another reason why timing the market is problematic.


I will tip my hat to anyone who saw this ETF down last year, bought it on January 1, 2023, and then held it through 2023.


A regular theme in the business cable channels and the media in general was the Maginificant Seven." This group of stocks exemplified the growth of AI and technology stocks for 2023. ( Microsoft, Amazon, Meta, Nvidia, Google, Netflix and Tesla)


This theme should carry forward into 2024, but I see the breadth of the market expanding and other investments joining this group.   




Conditions in 2023 are shaping the first half of 2024:


We are in full holiday mode, and I would like to take a moment and wish all my clients a happy Hanukkah and a Merry Christmas.


The year has been challenging with lingering COVID cases, the continued Ukraine/Russian war, inflation issues, and a new crisis between Israel/Gaza. However, with all the global issues, the S&P 500 is finishing the year at around 24% and the Nasdaq at around 43%. We still have four more trading days left, so these numbers will change.


The consumer continues to baffle the Federal Reserve and, at times, Wall Street. After eleven interest rate hikes in 2022 and four in 2023, consumers continue to use credit cards, purchase new and used cars, and travel at a high rate.


This has powered consumers to spend and companies to record strong earnings, beat estimates, and project growth into 2024. We hear that the consumer is getting tired or money is slowly running low. However, these individuals called for a recession in early 2023, and a substantial correction could have occurred in 2023.


Based on what I have seen in my research and listened to various company earnings calls, I believe there is a continued upside to the stock market in 2024. The fundamentals are still robust, corporate balance sheets look good, and companies are trimming employee numbers in light of union labor wins and wage increases. I believe companies have tapped out at increasing prices of products and services, and while I don't believe there will be any dramatic decreases, the economic condition of the US looks strong.


I am not in the camp where I see the Federal Reserve cutting interest rates in the first half, but I will leave the window open if the economy inverts, then the Federal Reserve may have to act with a series of rate decreases.


My argument against those calling for cuts so early is Federal Reserve Chairman Powell stated he is maintaining a two percent target on inflation, and we have not reached his goal, which could open the door to at least one or two more rate increases. I call this a wildcard event, which must be monitored.



An early disclosure


Aurora Strategic Advisors is a Registered Investment Advisory firm. As a "fiduciary," we must do what is best for our clients. Therefore, we must always put our clients' needs first because we recommend stocks, mutual funds, bonds, certificates of Deposit, insurance companies, annuities, and other investments. Charles Schwab & Co. is the custodian of our client funds after the merger with TD Ameritrade.


Some firms and individuals who are not "fiduciaries" are not held to the same level of accountability by the SEC or the State of North Carolina.  


(Please read that again. Know the difference.)


In the past, I created this report for clients only to give them a preview of what was ahead for the market. The goal of this report was to make new recommendations, changes, or deletions to a client's portfolios, as well as a preview of what I see on a 6-month horizon.  


However, I have found the reports were shared with non-clients, so I modified the content with additional disclosures. 


Since I am not familiar with non-client portfolios or non-client investment risks, I would advise them to speak to a financial advisor or schedule a free consultation with our office (minimum assets required) before acting on anything in this report.


Should an investor act independently, consider your time horizon and investment risk level and do additional research to cover your due diligence. This report is not designed for day trading or short-time horizons. When I look at any trend, economy, or investment, I take a long-term view of our recommendations and the suitability of our clients.    




The first half of 2024



The biggest fear of investors over the last two years is not the fear investors face in 2024. 


As we enter 2024, there are three significant factors on my mind, and I believe some investors' would agree. FOMO (Fear of Missing Out) is a factor in early 2024, but investors are smart enough not to chase a name just because it had a great year without doing their homework first.


First, the Presidential Election. In all my conversations with clients and the general public, it is the election between Joe Biden/ and, if the gallop polls are correct, Donald Trump. Let me say that this is not an endorsement for any candidate; it is a statement of fact.


Barring some significant change in the next six months, these two candidates could be on the ballot in November.


Both candidates have pros and cons, but it is not like they are unknown candidates. The real question is not who is in the White House but who will control the Senate and the House.


Wall Street understands that a President's agenda can dramatically be changed based on the makeup of the Senate and House of Representatives. How Wall Street and I see an election is not necessarily the same as how an investor or the general public sees the subject.


Second, Interest Rate hikes or rate cuts, which way are we going? I believe this question is as important as the election in November. Should the Federal Reserve need to hike rates once or twice, I would not call this a major event. The Federal Reserve is doing its best not to allow the economy to overheat; the key is slowing down the consumer.


However, if they start cutting rates, that could signal the economy is in danger and alarm consumers and Wall Street. Some may look at that and say it's good; others can view it as a caution flag-waving alert.


My final factor is consumer debt and Retirement savings. One key trend that started in about the middle of 2023 was the number of people taking money from their retirement plans. In addition, there are alarming increases in credit card debt and debt in general.


Should I agree with media outlets and those in politics that all is well for the country and consumers are doing well as inflation decreases? I don't see it that way.


I should not see consumers paying on average $775 for a new car payment, credit cards charging as high as 31% rates to customers, and a housing and rental market that is out of the price range for many consumers.


As someone on the front line, I have received calls from employees wanting to get money from their 401k plans and IRAs starting in August. I also hear why, which covers money for medical, emergency, car repairs, mortgage payments, paying down debt, helping a family member, travel, and car payments.



Do I expect a divergence in the market in 2024? Yes, I do. While technology and large-cap growth stocks garnered most of the positive headlines in 2023, many other sectors, like international stocks, value stocks, and utilities, did not do as well. In the last two months of 2023, we have seen bond yields drop below 5%, and that could continue if the Federal Reserve has to cut rates.


We have begun to see the market rally expand beyond the so-called "Magnificent Seven," which benefits all investors.


As we enter 2024, optimism is running high, but not outrageous.


I expect technology and the companies that integrate artificial intelligence seamlessly through their operations to benefit again. I expect these names and others to appear in the top holdings of many growth and balanced mutual funds and ETFs in 2024.


It will be a stock picker market for value funds, utilities, healthcare, and other sectors. Investors must be diligent and not abandon diversification, asset models, and, most notably, their investment tolerance.


Investors should not chase any stocks unless they have done the research. Each outlook report we create for our clients has substantial research on data points, the economy, the company, the sector, and many other non-tangibles. 


Let's talk about the elephant in the room. The most disappointing sector in 2023 was anything related to EVs. We have some high-level names in client portfolios, and most are underwater.


However, The Infrastructure Investment and Jobs Act is real, but the actual benefits will not start to impact the economy and some companies until mid-2024 or 2025.


I am not asking clients to agree with the policy, funding, or program's general mission. There is a fundamental shift in global governments and the US towards alternative energy. As companies shift their attention to creating more electric vehicles, world governments are focusing on alternative forms of energy away from fossil fuels. I don't know if this will take two or five years, but these investments will eventually become necessary.


For example, AMD was considered a non-factor in 2015 and 2016, but some unseen changes occurred in the company and the sector.


In 2016, I recommended adding AMD when the stock traded in the $10 to $20 range. Many analysts felt that AMD would never catch Intel and Nvidia was just another new chip maker.


AMD trades at nearly $140 today, and Nvidia is $488. We also recommended NVDA at various prices but didn't get the $18 price back in 2016.


In 2016, Intel was trading in the mid $30s; today, it is at $48. In my opinion, I view the company as a second-tier company compared to NVDA and AMD.


I would argue that both companies were out of favor, and investors could not see the potential coming down the road nor the new technologies they were spearheading. While some investors did get into both positions, they were at much higher prices.


For employees participating in 401k, 403b, and IRAs (Roth and traditional).


While employers are not battling for employees like during COVID-19, quality employees are still getting solid wages. With recent wins by unions at the big three automakers and union wins at FedEx, UPS, and other employers, employees should be making the most of these wins.


I try not to get caught up in whether you like TV personalities like Suze Orman or David Rasmey. Still, we have shared articles from them and such news sources as Bloomberg and the Wall Street Journal about retirement savings and the fact that employees are not saving enough.


For those who say they can't afford to contribute to a plan, my answer is that the IRS is already taking a big bite out of every paycheck. Instead of doing nothing and handing it over, take 3% or 4%, re-direct those funds into a retirement plan, and reduce the tax bite. Employees will see they are taking home almost the same amount of pay and getting the match from their employer.


The goal that most experts say is the ideal amount is 10% of your pay. If you were to do the math, I believe most employees would be shocked by the little difference they see missing from their take-home pay. On the positive side, seeing the growth in your account is better than doing nothing.


In recent years, more and more clients and non-clients have approached me about old 401k plans and other corporate retirement plans left at old employers. Employees overlook the performance of these various retirement plans and sometimes don't factor them into their overall financial plan.


Several months ago, a client contacted us about an old 401k at an old employer. The funds were placed in the money market fund, earning approximately 9.2% over the last few years. The amount was $72,000. His investment account with our firm earned over 82% during that period.


If we apply that same percentage towards his old account minus his 9.2%, he lost approximately $5,241, and that does not take into account the power of compounding and re-investing dividends.


As we explain to our clients, all your assets must always work for you and should reflect an overall investment strategy.


Now, let's return to what we see coming in 2024 and what we recommend for our clients.


First, I would not be completely surprised by a pullback or correction late in the first half. Similar to 2023, should the market take off, I expect some profit-taking.


I discussed the $5 trillion on the sidelines early in the report. Those funds missed the rally from Jan through July. Those same funds missed buying the pullback in late summer to about mid-October. The funds missed the rally and Santa Claus rally occurring now in the closing days of 2023. So, what will they do in 2024?


Another example to support my position,


About six weeks ago, we recommended adding ELF Cosmetics to client portfolios. While this recommendation was not made to all clients, it had to conform to client risk tolerances and suitability requirements. We purchased the position at $94.99, and in recent days, the stock has been hoovering around the $145 to $152 range. The performance of the position represents approximately 60% in that period.


While this is not typical, I believe quality investments are available, and many investors have missed out. Add this to the recommendations from last December 22 and several other additions throughout the year; these represent substantial missed opportunities and profits for investors.


So, with gains as we have seen in various individual investment indexes, I believe the 5 trillion dollars will be looking to enter the market in 2024. The entry point will be the year's first half as these investors look for a window.


In some years, analysts and investors will go after investments that underperformed in the previous year, take strong positions in those investments, and hope for a rally in the sectors. That is the wrong philosophy based on current conditions and what I see for the first half.


If you are a non-client, before I follow any recommendation or begin an investment strategy, I recommend speaking to a financial advisor or scheduling a free, no-obligation meeting with my office.


I find that 9 out of 10 clients who walk into our office do not have any plan in place and even lack a proper understanding of everything they own. A person would never build a house without a blueprint. These tools act as guides and allow you to make changes or correct errors before you have a finished product.


If you're considering a retirement package from your employer or changing employers, interview at least two advisors before deciding to roll over your funds.


Investors should understand how their advisor is compensated. Are they commissionable agents who only have access to one or two financial products and receive a 5% or 6% commission, or are they Registered Investment Advisor who gets an advisory fee over some time to work with a client on an ongoing basis? The answer could have severe ramifications for your long-term plan.


I wish everyone a successful journey in the remainder of 2023 with discipline, education, and patience, and I hope your investments help you reach your personal financial goals. 




As we prepare to enter 2024, I recommend four new positions to client portfolios.


  1.       Alphabet (Google) This household name, used in everything related to search engines, has been quiet and overshadowed by the remainder of the "Magnificant Seven." The stock has not been part of the AI rally and has been beaten to the punch by Microsoft. The stock has remained in a tepid range. It entered 2023 at around $90 a share and looks to close the year at around $142. They look to bring their chatbot to their search engine and customers, which could be a significant game changer for the company. I am looking for any softness in this stock to add to portfolios.


  1.       Airbnb (ABNB): If you have traveled and elected not to stay in a Hilton, Hyatt, or Marriott property, you have stayed at an Airbnb. For those under 45, this is the go-to option to enjoy a vacation anywhere in the world. I like their balance sheet, management running and expanding the company, and the consistent earnings reports over the last few calls. The stock moved well in 2023 as it started the year around $90 a share and now trades at around $143


  1.       Wolfspeed (WOLF) is a semiconductor company focused on silicon carbide technologies. Its product families include silicon carbide material and power devices targeted for various applications such as electric vehicles, fast charging, and renewable energy and storage. The company is located in Durham, NC, and will directly benefit from the Infrastructure Investment and Jobs Act. The stock did disappoint on the last two earnings calls, and the stock has pulled back to a low of $27 in late October, but participating in the rally now sits around the $45 range.


  1.       Palantir operates AI data mining platforms for government agencies and enterprise businesses. While not a household name, Palantir's Gotham Platform, used for government work, was a component of the systems that located Osama bin Laden. They find patterns in disparate data so intelligence teams can locate and respond to terrorism threats. Unconfirmed sources say Gotham played a role in capturing Osama bin Laden in 2011. The stock was trading around $7.50 in Jan and is trading around the $17.50 range today.


When we enter 2024, we will continue to hold onto Square, General Electric, AMD, NVDA, Microsoft, Snow, Rivian, ELF, American Water Works, C3.AI, Iron Mountain, Abbvie, Target, Zoetis, First Trust Water ETF, Schwab S&P 500,  LI Auto, Tesla, Xpeng, Viacom, Fuelcell, ChargePoint, and Marvell Technologies.


I am deleting Apple from our recommendation list for at least the first half. I see some headwinds ahead for the company, including losing the lawsuit on the Apple watch, which will be suspended for now.


I recommended increasing current positions in AMD, Square, Microsoft, AI, Rivian, and GE holdings on any pullback during the first half of 2024. 


For other additions, I may add some value names if conditions change. I am looking forward to discussing these new names as potential additions to our top holdings:


I must stress to any non-client looking at these positions that this is not a complete recommendation list or solicitation for these holdings. I can assure you they will change throughout the year. Non-clients are not privy to when I am adding or selling or what price targets I have on any investment. Please consult a financial advisor, contact us directly, or conduct due diligence before investing. 





These are Aurora Strategic Advisors' views 2023/2024 (ASA) and should not be construed as investment advice. All investments are held with Charles Schwab & Co. as the custodian.  


This material is not intended to be relied on as a forecast, research, or investment advice, not a recommendation, offer, or solicitation to buy or sell any securities or investment strategy. 


Conflict of Interest. 


ASA and our clients hold positions in several of the named stocks in this report, but we provide no investment advice to the companies named in the report. 


This report is based on a professional look ahead at the markets for our clients who have met with an investment advisor representative at our firm and had their particular investment needs and concerns analyzed.


ASA does not provide or give tax or legal advice. Please consult with your financial advisor for further information. Opinions are subject to change without notice and are not intended as investment advice or to predict future performance.