Will the stocks that dominated investors' thinking in 2023 stage a repeat performance in 2024?

By Philip van Doorn

Also, Powell and the Fed sitting pretty, an overlooked force driving the stock market higher and a changing streaming landscape

When thinking about which companies have generated the most hype in the stock market this year, Nvidia Corp. (NVDA) and other companies heavily involved with artificial intelligence come to mind, including Microsoft Corp. (MSFT), which is a heavy investor in OpenAI.

But you may not have realized that Coinbase Global Inc.'s (COIN) stock has risen nearly fourfold during 2023.

Ciara Linnane and Emily Bary look at the 10 companies that generated the most buzz among MarketWatch readers and staff members in 2023, and tell us what to expect from them in 2024.

The Ratings Game: Could Nvidia's stock-up 231% this year-actually be a bargain?

More buzz from the Distributed Ledger newsletter: Bitcoin likely to extend rally for at least another year, if this historical pattern holds true

Powell and the Fed should be feeling pretty good right now

Federal Reserve Chairman Jerome Powell should have a happy New Year's celebration, considering the success of the central bank's efforts to reduce inflation and signs that U.S. economic growth is accelerating.

The Federal Reserve's latest economic projections - released Wednesday - indicate three cuts to the federal-funds rate in 2024, from its current target range of 5.25% to 4.50%. But there is a range of opinion among economists about the timing and scope of interest rate cuts, as Greg Robb reports.

Jeffry Bartash lists rate-cut predictions from 12 economists.

And now for some Fed-related warnings:

History shows even the Fed can't really predict what it does with interest rates a year outThe market is almost always wrong about what the Fed will do next, Wall Street economist warnsMarkets are declaring victory over inflation for Powell, and that has some economists worried

Another reason stocks have been so hot in December

The downward movement of long-term interest rates is a sign that overall liquidity is increasing in the U.S., despite the Federal Reserve's balance-sheet reduction. The yield on 10-year U.S. Treasury notes BX:TMUBMUSD10Y has dropped to 3.92% from 4.88% at the end of October. That sort of move tends to be correlated with a strong stock market, but you might be wondering what is driving it.

Joseph Adinolfi sheds light on the market forces behind December's stock-market rally.

Related, from Lawrence G. McMillan: S&P 500 is stretched but sell signals are nowhere in sight

How to build a retirement nest egg while lowering risk

Over the past 20 years through Dec. 14, the S&P 500 SPX has had an average annual return of 9.8% with dividends reinvested, according to FactSet. Going back to 1928, the S&P 500's average annual return has been closer to 11%, according to Paul Merriman's research.

But in any given year, the index can tumble. Here's a look at the past 20 calendar years' performance for the U.S. benchmark:

                  Year                  S&P 500 return 
          2023 through Dec. 14                     25% 
                  2022                            -18% 
                  2021                             29% 
                  2020                             18% 
                  2019                             31% 
                  2018                             -4% 
                  2017                             22% 
                  2016                             12% 
                  2015                              1% 
                  2014                             14% 
                  2013                             32% 
                  2012                             16% 
                  2011                              1% 
                  2010                             15% 
                  2009                             26% 
                  2008                            -37% 
                  2007                              5% 
                  2006                             16% 
                  2005                              5% 
                  2004                             11% 
    End of 2008 through Dec. 14, 2023             603% 
    End of 2003 through Dec. 14, 2023             529% 
                                       Source: FactSet 

Of course, if you are building a retirement nest egg and investing the money broadly in the stock market, it means you are probably adding to your account twice a month. The long-term returns at the bottom of the table are there to illustrate the power of long-term compounding, despite the year-to-year variance of market performance.

And keep in mind that measuring performance by calendar year is arbitrary. From a market closing peak on Oct. 9, 2007 through a low on March 9, 2009, the U.S. credit crisis pushed the S&P 500 down by 55%, again with dividends reinvested.

The point of all this information is to underline a psychological barrier for some investors. Merriman outlines how things might go during the first few years after someone begins putting money away for retirement - you might have some pain during the first few years but it is important not to give up. Merriman looks back through 80 years of market history to arrive at this magic number of years that you must remain committed to a retirement savings strategy to ride out market turmoil and enjoy the fruits of your labor.

Help me retire: I'm 59 and have $190,000 in income in quasi-retirement. Can my wife and I live comfortably with one or two trips a year?

Investors target Macy's

Shares of Macy's Inc. (M) shot up 19% on Monday to close at $20.77 following a report in the Wall Street Journal that a group of investors was looking to take the retailer private for $5.8 billion or $21 a share. By Thursday's close, the stock had declined to $19.62. That was 7% below the reported takeout price, but it was 15% higher than the shares closed a week earlier and 67% higher than a month earlier.

Ciara Linnane took a close look at trading activity for Macy's bonds, especially in light of the company's better-than-expected third-quarter results.

More reaction and analysis:

Macy's stock falls more than 7% after Citi downgrade amid buyout reportMacy's real estate alone is worth nearly $3 billion more than investors' bid, these analysts sayCommercial real estate a top threat to financial system in 2024, U.S. regulators say

Other company news

Here's a roundup of other corporate developments this week:

Pfizer's stock on pace for biggest drop in 15 years as profit and revenue guidance falls short of expectationsModerna's stock boosted by positive data from trial of melanoma treatment combined with Merck's KeytrudaWhat Epic's win against Google means for the app-store economyGM to lay off about 1,300 in Michigan as Bolt, Camaro end productionGM's robotaxi unit Cruise dismisses nine top execs, announces layoffs amid probe into San Francisco crash that injured pedestrian

The case for Amazon's stock in 2024

Amazon.com Inc. (AMZN) is Wall Street analysts' favorite among the "Magnificent Seven," based on the percentage of "buy" or equivalent ratings among analysts polled by FactSet:

   Company                       Ticker   Share "buy" ratings  Dec. 14 price  Consensus price target  Implied 12-month upside potential 
   Amazon.com Inc.                AMZN                    98%        $147.42                 $176.74                                20% 
   Nvidia Corp.                   NVDA                    94%        $483.50                 $666.34                                38% 
   Microsoft Corp.                MSFT                    91%        $365.93                 $416.23                                14% 
   Meta Platforms Inc. Class A    META                    84%        $333.17                 $379.26                                14% 
   Alphabet Inc. Class A         GOOGL                    82%        $131.94                 $153.69                                16% 
   Apple Inc.                     AAPL                    61%        $198.11                 $197.30                                 0% 
   Tesla Inc.                     TSLA                    43%        $251.05                 $239.18                                -5% 
                                                                                                                        Source: FactSet 

Here's what the analysts have to say about Amazon:

Why Amazon's stock could be 2024's biggest winner among major internet namesAmazon's stock cheered as 2024 top pick-even after a 75% jump this year

How about some stocks in smaller companies?

Michael Brush interviews Aram Green, the portfolio manager of the ClearBridge Select Fund, which is rated five stars (the highest rating) within Morningstar's "midcap growth" fund category. Green explains how he selects small and midsize companies for investment and names eight examples.

What's ahead for the streaming wars in 2024?

Streaming has changed the movie and TV industries, but most streaming services continue to lose money, with Netflix Inc. (NFLX) the glaring exception.

Jon Swartz reports on expected changes for streaming services in 2024, as Walt Disney Co. (DIS), Amazon, Paramount Global (PARA), Comcast Corp. (CMCSA) and other companies keep trying to figure out what viewers want.

More streaming industry news:

For the first time, Netflix releases viewership data for nearly of all its titlesParamount's bond spreads tighten in heavy volume amid reports of a possible dealShari Redstone reportedly in talks to sell Paramount parent to Skydance

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-Philip van Doorn

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