Stocks were mixed with CPI data and Fed data on the horizon

Stocks face an “uneven and fragmented” 2024.

Wall Street widely expects the Fed to keep interest rates steady when central bankers unveil their policy decision later this week.

But that doesn’t mean stocks will continue to rise next year.

Investors expect the Fed to make a soft landing and start cutting interest rates in 2024. While this scenario is still possible, interest rate cuts could also cause the economy to slow or contract, which would put stocks in a different environment. than it is now. Today, Greg Marcus, managing director at UBS Private Wealth Management, wrote in a note on Monday.

He added that individual stocks will also perform differently next year, “with a variety of winners and losers across all sectors,” in an “uneven and fragmented” stock market. Even if the Fed reverses its tightening campaign, interest rates will still be higher than they were during the lucrative zero percent interest rate era.

“Investors will focus more on rewarding companies that show signs of growth and avoid unprofitable and speculative companies,” he said, stressing that fundamentals will play a bigger role than during the 2000s. He said that in 2024, investors will be more aware of separating the wheat from the chaff.

“Markets are already high right now, and although the economy has proven resilient to higher interest rates this year, that cannot continue indefinitely,” Marcus said. “Prices will fall but are still expected to remain higher for longer, and not all companies will be able to cope with this environment.”