The Nasdaq Just Did Something It Has Done Only 5 Times Before. History Says a Big Move in Stocks Could Follow in 2024

The Nasdaq Composite (NASDAQINDEX: ^IXIC) is an index comprising about 3,500 stocks, many of which come from the technology and consumer discretionary sectors. To that end, the Nasdaq is often considered a benchmark for growth stocks because many of its components are on the cutting edge of various technologies and consumer trends, such as artificial intelligence, cloud computing, cybersecurity, and e-commerce.

Investors rotated away from growth stocks as post-pandemic inflation scorched the economy. The Nasdaq tumbled deep into bear market territory in 2022, falling as much as 36% from its high.

That drawdown was largely driven by recession fears arising from aggressive monetary policy. Specifically, the Federal Reserve has battled inflation by raising its benchmark interest rate at its fastest pace since the 1980s. Many economists feared (and some continue to fear) that policymakers could trigger a recession by tightening credit conditions too quickly.

However, the Nasdaq shook off those fears and moved higher last year as signs of economic resilience and excitement about artificial intelligence improved market sentiment. The index soared 43.4% in 2023, one of its best performances in history. Prior to that, the Nasdaq had achieved an annual gain exceeding 40% only five times since its inception in 1971.

Historically, annual gains exceeding 40% have portended more upward momentum in the Nasdaq. Of course, investors should never put too much weight on such forecasts simply because each situation is unique. The last few years have been defined by fallout from a global pandemic, and there is no precedent for such an event. Even so, historical patterns are still worth consideration. Here’s what investors should know.

History says the Nasdaq could move higher in 2024

The Nasdaq Composite returned 43.4% in 2023, marking the sixth time the index has increased more than 40% in a calendar year. The chart below shows the last five events and details the Nasdaq’s return 12…