Money

2024 Lunar New Year: Stock Market, Gold History

  • The Year of the Dragon historically brings prosperity to the U.S. stock market
  • Tom Lee of Fundstrat Global Advisors predicts a potential rise of the S&P 500 to 5,350 points by the end of 2024
  • Small-cap stocks also tend to outperform during Dragon years
  • Investor inflows into equities could lead to a broader stock-market rally
  • Demand for gold typically surges during the Lunar New Year season

Introduction

The Year of the Dragon is often associated with prosperity and strength, and according to Tom Lee, head of research at Fundstrat Global Advisors, this could bode well for the U.S. stock market in 2024. The historical data shows that the stock market tends to perform exceptionally well during Dragon years, with an average gain of 12.7%. This suggests that the recent rally that has brought the S&P 500 to the 5,000-point level may still have room to run.

Economic Insights

U.S. Stock Market Outlook

According to Tom Lee, the S&P 500 could potentially rise as high as 5,350 points by the end of 2024, implying a 6.4% advance from its current level. The historical track record of the stock market during Dragon years supports this projection, as the S&P 500 has finished higher 75% of the time during these years.

Opportunities for Small-Cap Stocks

Small-cap stocks have historically outperformed during Dragon years, with the iShares Russell 2000 ETF outperforming the S&P 500 88% of the time since 1979. Currently, the price-to-book ratio of the Russell 2000 index is significantly lower than that of the S&P 500, indicating potential opportunities for investors.

Cultural Implications

Gold Demand during Lunar New Year

The Lunar New Year season, which falls in the Year of the Dragon in 2024, usually sees a surge in demand for gold in China. Gold is considered a symbol of good fortune and is often purchased as gifts during this time. This increased demand could potentially lead to a rise in gold prices and benefit gold-related products.

Conclusion

As we enter the Year of the Dragon in 2024, the U.S. stock market and gold market are poised for potential growth. Historical data suggests that the stock market could continue its rally, with small-cap stocks and investor inflows playing a significant role. Additionally, the demand for gold during the Lunar New Year season could further support its prices. Investors and market participants should keep a close eye on these trends and consider the potential opportunities that the Year of the Dragon may bring.

Share your thoughts on what the Year of the Dragon could mean for the stock market and gold prices in the comments below!

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