A median of 518 respondents expect the S&P 500 to climb to 4,808 points next year — topping its previous closing peak of 4,797 hit in January 2022 — and the 10-year Treasury yield to drop to 3.8% from this year’s high of 5%. 

More than two thirds of respondents indicated they don’t see a hard economic landing as the top risk to markets and majority expects Federal Reserve interest rate cuts to begin before July.

“US exceptionalism remains firmly in place,” said Aneeka Gupta, director of macroeconomic research at WisdomTree. “The key drivers are a more favourable economic backdrop versus China and Europe, improving earnings estimates and cheaper valuations for the equal-weighted S&P 500.”

The bullish outlook is a stark contrast from expectations coming into this year, when worries about a staunchly hawkish Fed and the spectre of a US recession had investors bracing for volatile markets. But the economy has defied pessimistic forecasts, the labour market remains resilient and Corporate America’s earnings are rebounding sooner than estimated.

Top Wall Street strategists including at Deutsche Bank AG and RBC Capital Markets are also predicting an all-time high for US stocks next year, as they say the S&P 500 has now adapted to the higher rate environment.

Not everyone is as optimistic. Bank of America Corp strategist Michael Hartnett said while a pullback in yields in recent months had certainly fueled equity gains, a further drop to near 3% next year would signal a sputtering economy and end up being a drag on stocks. Indeed, about 33% of survey participants said they expect an exhausted consumer to represent the biggest risk to the rally next year.

Moreover, the median forecast in the survey — while a record closing high — represents a gain of just about 4% from the S&P 500’s current levels. That’s well below an average 19% jump recorded in a year in which the index advances, according to data compiled by Bloomberg. The level is also below an intraday all-time peak of 4,819.

“We see a bit of tension between possible rate cuts and equity markets,” said Richard Flax, chief investment officer at European digital wealth manager Moneyfarm. “We are currently leaning toward a scenario where growth decelerates and we see some earnings downgrades. That makes us slightly cautious on equities in 2024.”

For Goldman Sachs Group strategists, the ideal approach is to simply remain invested in stocks and avoid the urge to sell during periods of volatility. MLIV participants are planning on following that advice, with 26% saying they would increase their holdings over the next month — an above-average reading for a question that the poll began asking in August 2022. 

Read more: Most Expect Their Investments to Do Better in 2024: MLIV Pulse

The US is also poised to retain its haven appeal, with 43% saying those stocks will continue outperforming international peers in 2024. That’s par for the course, as the S&P 500 has beaten gains in global equities in eight of the past 10 years.

But after the seven big tech stocks, including Apple Inc., Tesla Inc. and Nvidia Corp., have dominated the market for most of 2023, investors are turning to roughed-up corners of the market from small caps to value shares as they seek out bargains.

“We don’t expect the rally in the Magnificent Seven names to be sustained over the long term,” said Shanti Kelemen, chief investment officer at M&G Wealth. “Valuations are much more attractive in other parts of the US market. As companies in more traditional sectors adopt AI, there is potential to improve productivity.” 

Asked about the biggest bargains for next year, MLIV Pulse respondents overwhelmingly pointed to emerging markets outside Greater China. Hong Kong’s benchmark Hang Seng Index, heading for a record fourth year of losses in 2023, is likely to remain a laggard next year, too. Gold, meanwhile, is expected to gain about 5%.