That's a far cry from where many Wall Street professionals thought stocks would finish the year. In January, the market consensus was that a recession was inevitable, as interest rate increases would reduce corporate profits and devastate consumers' wallets.
Instead, profits have remained stable while the American consumer has proven more resilient than expected. Liquidity injections have dried up, of course, but investments in reshoring efforts, increased productivity thanks to AI, and heavy spending on things like Taylor Swift tickets have helped boost the economy, and the market has continued. example.
With 2024 on the horizon, analysts have begun releasing their outlook for next year and many on Wall Street expect the good times to continue. The consensus so far is that stocks will have a modestly strong year as the economy slows thanks to the Federal Reserve's efforts in its battle against inflation.
Some, like JP Morgan analysts, I think this is too optimistic. They believe that the lagging effects of tight monetary policy have not yet been fully felt, and that next year the US economy will bear the full brunt of interest rate increases, which in turn will cause stocks to plummet.
Others, such as analysts at Bank of America, BMO and Deutsche Bank, believe the market could reach new all-time highs. They think that if the economy starts to decline due to higher interest rates, the Federal Reserve will act quickly to prop it up, spurring bullish sentiment among investors.
Instead of trying to guess where the market is headed, investors would be better off finding high-quality stocks to invest in for the long term. Fortunately, Morningstar's Margaret Giles recently compiled a list of the stocks to buy now, drawn from the largest collection of analysts on the best companies to own. These stocks have "predictable cash flows and are led by management teams that have a track record of making smart capital allocation decisions," she wrote.
Those 10 stocks are below, along with each company's ticker symbol, last closing price, price-to-fair value ratio, Morningstar Index. Uncertainty ratingMorningstar Capital Allocation Ratingand the action industry.
