S&P 500 Could Build On 2023's 24% Gain: Analyst Shares Key Data Supporting Continued Broader Market Performance

Small-cap stocks came back strongly as the broader market rebounded in November following a late summer slump. An analyst sees small-cap stocks’ strong performances as a harbinger of good times for the market.

What Happened: Tapping into history, Carson Group’s Ryan Detrick said that moves of more than 10% in the Russell 2000 Index, an index of small-cap stocks, are not historically bearish. The R2K Index added 12.05% during December, taking the gain for the year to 15.1%.

The index has made more than 10% gains in December 19 other times, Detrick said. Following such strength in December, the S&P 500 Index’s performance six months later was positive 90% of the time, he said.

A year later, the index was higher 14 out of the 19 times and the average gain was 15.8%, he added.

See Also: Best Small Cap Stocks

Why It’s Important: The S&P 500, a measure of broader market outperformance, ended 2023 with a gain of 24.23%. Looking ahead, analysts are wary about rich valuations tempering market optimism. Most are of the view the mega-cap tech rally that fueled much of the market upside in 2023 could temper, leaving the burden of supporting the market on the smid-caps.

In his tech predictions for 2024, Deepwater Asset Management’s Gene Munster said the iShares Russell 2000 Growth ETF IWO will outperform the SPDR S&P 500 ETF Trust SPY, with sub-$20 billion tech companies likely outperforming large-cap companies.

The upward market momentum hinges on the Federal Reserve beginning to reverse its rate hikes and the economy averting a hard landing.

The SPDR S&P 500 ETF Trust SPY, an exchange-traded fund that tracks the S&P 500 Index, ended Friday’s session down 0.29% at $475.31, according to Benzinga Pro data.

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