Wall Street strategists actually called 2023 correctly — apart from these seven stocks

As Wall Street strategists roll out their 2024 forecasts, they’ve been getting plenty of side-eye for largely steering their clients wrong on where stocks would end up in 2023.

But Jim Bianco, president and macro strategist at Bianco Research, has crept to their defense, arguing that they weren’t 100% off base. “So, yes, strategists were wrong about stock returns in 2023. But the heavy concentration of the ‘Magnificent Seven’ stocks made it a unique year,” he said in a thread on X late Tuesday.

Zeroing in on the oft-discussed dominance of those stocks this year, Bianco reminds us that Apple
AAPL,
-0.37%,
Microsoft
MSFT,
-0.96%,
Nvidia
NVDA,
+0.78%,
Amazon
AMZN,
-0.21%,
Alphabet
GOOGL,
-1.17%,
Tesla
TSLA,
+0.68%
and Meta
META,
-1.50%
began the year 20% of the S&P 500’s market capitalization weighting, and are set to end it at 30%. He flags this chart that shines a spotlight on the biggest concentration of the top five names on the index since 1964:

His other chart also lays out the contribution from the other 493 stocks to the S&P’s rise this year:

“So yes, strategists got 2023’s index returns wrong. But did the bulls think 493 stocks would fail to outperform cash while seven stocks driven by two letters, ‘AI,’ would power the entire index to 13% gains alone?” asks Bianco.

Here’s MarketWatch’s compilation of forecasts for 2023 and more than half are below where the index
SPX
is sitting now at 4,554.89. Some of those were updated during the year:

As for next year, apart from some bearish outliers like BCA Research, calling for a possible drop to 3,100 on a recession, a new 5,000 goal for the S&P 500 is looking like a popular choice.

Both Bank of America and RBC have 5,000 as end-2024 targets, while Deutsche Bank is currently on top with a forecast for 5,100 that its strategists say may turn out to be too conservative.

Overall, top strategists largely expect further gains in U.S. stocks, but with returns far below average for the S&P 500 next year.

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