Wall Street Boosts S&P 500 Target to Record 6,000: Can Market Momentum Sustain?

Moomoo News Global wrote a column · Jun 17 08:22

Driven by expectations of a more dovish Federal Reserve policy and a strong performance from mega-caps, both the $S&P 500 Index(.SPX.US)$ and $NASDAQ 100 Index(.NDX.US)$ have risen for a seventh consecutive week.

Wall Street Boosts S&P 500 Target to Record 6,000: Can Market Momentum Sustain?

Artificial intelligence continues to dominate the market, with $Apple(AAPL.US)$ reclaiming the title of the most valuable company by market cap last week after it unveiled new AI features. Meanwhile, $NVIDIA(NVDA.US)$ and $Microsoft(MSFT.US)$ also reached all-time highs, with all three tech giants surpassing the $3 trillion market capitalization threshold.

Buoyed by optimistic sentiment in the market, Wall Street Institutions have raised their S&P 500 targets, with the highest reaching up to 6,000.

Source: Bloomberg

Evercore ISI lifted the S&P 500 target to 6,000

Julian Emanuel, Evercore ISI’s chief equity and quantitative strategist, raised his year-end forecast on the S&P 500 Index to 6,000, the highest among major equity strategists tracked by Bloomberg — and roughly 10% above the gauge’s closing level on Friday.

Optimism over a resilient economy, improving corporate earnings and the end of the Federal Reserve’s tightening cycle has pushed the S&P 500 up 14% this year, and Emanuel says ebbing inflation and artificial-intelligence fervor will propel stocks even higher.

Last Friday, Goldman Sachs boosted the S&P 500 target to 5600 for a third time

Goldman Sachs’s equity strategists led by David Kostin now see the US stock benchmark index finishing the year at 5,600, up from a 5,200 level they predicted in February. The new target implies a roughly 3% advance in the gauge from its Friday close.

The upgrade in the target is “driven by milder-than-average negative earnings revisions and a higher fair value P/E multiple,” Kostin wrote in a note to clients last Friday. Kostin raised the S&P 500’s price-earnings multiple he deems fair to 20.4 from 19.5.

Besides, UBS Group AG’s Jonathan Golub and BMO Capital Markets’ Brian Belski have also set a year-end target level of 5600 points for the S&P 500.

However, amidst the market's optimistic sentiment, concerns remain whether the momentum supporting the rise of the S&P 500 can continue.

● Fed reduces 2024 rate cut expectations

The hawkish signal from the Fed came despite the release — just hours ahead of the meeting — of cooler-than-expected consumer price index data for May. “Four Fed officials see no rate cuts this year, up from two officials in the March projections. Seven see one cut, while eight see two cuts. This means a narrow majority sees no more than one cut this year as a base-case.” Nick Timiraos, WSJ's Fed mouthpiece, said.

Source: CME FedWatch

● The market is overbought from a technical perspective, especially in the technology sector

The RSI (Relative Strength Index) for the Nasdaq 100 index, which represents large technology stocks, has surged to 90.875 and has entered the "severely overbought" zone.

● Lacking short-term catalysts

After Nvidia's stock split and Apple's Worldwide Developers Conference (WWDC), the market has entered a "lull," lacking short-term catalysts to drive the market higher (such as significant tech earnings reports or important macroeconomic data), and the risk-reward is starting to lean towards a pullback.

So Mooers, do you think the buying momentum in the tech stocks can continue? What do you think the target price for the S&P 500 will be by the end of the year?

Source: Bloomberg, Financial Times, WSJ

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