Is the S&P 500 in a Bull Market? Wall Street's Top Strategists Split on the Way Forward

Analysts Notebook wrote a column · Jun 13, 2023 16:11

$S&P 500 Index (.SPX.US)$ ended at almost 14-month high on Monday after marking a gain of a little over 20% from its Oct. 12, 2022 finish, which was the lowest close since the start of the bear market last year.

Under the criteria used by many market watchers, this 20% rise from the recent low signals that the S&P 500 has entered a bull market.

The threshold for declaring bulls and bears is arbitrary. Some market watchers insist that a bull market won't be confirmed until the S&P 500 takes out its previous record closing high from Jan. 3, 2022.

Is the S&P 500 in a bull market? This question has left Wall Street's top strategists split on the way forward.

Morgan Stanley: The rally in stocks isn't the start of a new bull market

The latest S&P 500 push has done nothing to convince the bearish Mike Wilson of Morgan Stanley who is repeating his view that gains can't last because the earnings recession isn't over. He says investors may be making two costly assumptions right now:

"First, that the impact of interest rate hikes on growth is behind us; and second, that several areas of the market, including consumer cyclicals, tech and communications services, experienced their own earnings recession last year and are likely to see accelerating earnings growth even as other parts of the market suffer," he writes in a fresh note to clients. His base case sees the S&P 500 dropping to 3,900.

Is the S&P 500 in a Bull Market? Wall Street's Top Strategists Split on the Way Forward

Goldman Sachs: The S&P 500 could hit 4,500 by the end of 2023

David Kostin and the equity strategy team at Goldman Sachs increased their year-end target to 4,500 from 4,000, driven by a new "soft landing" forecast and higher-than-expected earnings.

"The P/E multiple of 19x is greater than we expected, led by a few mega cap stocks," the firm writes. "But prior episodes of sharply narrowing breadth have been followed by a 'catch-up' from a broader valuation re-rating. The potential profit boost from AI has expanded the right tail for equities, while left tail risks from recession and hawkish Fed policy remain."

BofA: "It's official, the bear market is behind us"

"The bear market is officially over," the BofA strategist wrote in a note Friday. While the definition of a bull market is "arbitrary," the S&P 500 has extended gains in the 12 months after crossing the 20% turning point 92% of the time going back to the 1950s, Bank of America Corp.'s Savita Subramanian said.

Wells Fargo: "History shows the S&P 500 does not bottom until, on average, six months after the first Fed rate cut."

Barclays: "... There have only been two comparable instances of such narrow [stock] leadership over the last three decades ... the leaders collapsed in 2000 ... whereas in 2020 the leaders delivered on earnings ... we think the current episode will likely resemble 2020."

Evercore: "A mountain of money in money markets accounts is 'fuel for an equity momentum market move' and could 'accelerate the arrival of our year end S&P 500 price target of 4,450 as early as 4 July."

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The Cow King : Everyone keeps saying that the worst is coming.
I rolled my eyes...
As if COVID is not enough

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TechTrek Invest : analysts havn't got a clue which way the market is going. It could go up, it could go down, or it could just trade sideways for the next 6 months.
if analysts knew we would have many quintillionaires.

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Kenmi : Hope things get better

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