Analysts Predict a Bullish Year for Stocks Despite Challenges

The stock market has started the new year on a robust note. In February, the key U.S. stock index, Standard & Poor’s 500, surpassed the 5000-point mark for the first time in history. Stocks in Europe also performed well with the Prague stock exchange index strengthening to its highest value since June 2008.

Analysts predict a favorable year for stocks, though it may not be as successful as the previous one. “In general, this year will be marked by rather positive fundamental factors, whether it’s the growth of profitability of American companies by more than ten percent, or the drop in interest rates,” said David Brzek from Fio bank.

Despite the positive outlook, Brzek believes that the year won’t witness a significantly soaring growth as in 2023, when the S&P index strengthened by over 24 percent. He anticipates that the S&P’s annual performance will align more with long-term averages at a level of seven percent.

Other analysts also do not rule out a slight strengthening. “By the end of the year, the S&P index could climb to 5200 points, considering that the performance of the U.S. economy will remain robust and the U.S. Federal Reserve will begin to cut interest rates,” said Tomáš Pfeiler from Cyrrus.

The main factor driving the current stock growth is euphoria around Artificial Intelligence (AI), according to analysts. However, Pfeiler warns that the euphoria may be exaggerated and that markets are vulnerable to negative news, making a short-term correction very likely.