Wall Street Hikes 2024 S&P 500 Targets After Record-Setting Stock Rally

Source: Moomoo

The record-setting stock-market rally has surprised Wall Street forecasters and forced some to bump up their predictions of year-end S&P 500 targets.

• Last week, strategists at Societe Generale lifted their year-end target to 5,500 from 4,750, indicating additional upside of nearly 5% from Friday’s closing level of 5,234.18. That appears to be the most bullish target among Wall Street’s biggest banks and research firms.

• Earlier this month, Bank of America’s Savita Subramanian and strategists at Barclays joined the bullish club in adopting 5,400 and 5,300 as their year-end targets for the S&P 500, respectively, pointing to resiliency in the economy and earnings strength from mega-cap technology stocks.

• Goldman Sachs in February raised its forecast to 5,200, its second upward revision since late last year. The bank now falls in step with some of Wall Street’s most bullish forecasters -Oppenheimer's John Stoltzfus and Fundstrat’s Tom Lee, who also see a 5,200 finish after each accurately foresaw 2023's bull market.

"US exceptionalism is going from strength to strength," Societe Generale strategist Manish Kabra wrote.

That exceptionalism - the unique drivers of the US stock market that has kept it ahead of its peers for the last four decades - is expected to continue to drive profits in more and more large cap stocks.

There are three macroeconomic themes that are continuing to support U.S. stock rally right now, Kabra said. First is the "reshoring boom," which has encouraged more domestic production and led to a "re-industrialization" of the US. Then there's the AI boom, without which the S&P 500 would be at around 4,400, he said. And more recently, Societe Generale is optimistic about US financials as credit conditions and lending standards improve.

"Despite widespread market optimism, we view this as rational rather than excessive, as profit growth continues to increase and set new records for the S&P 500," Kabra wrote.

The rising market tide has sucked in CFOs at publicly traded companies. New research out of Goldman Sachs estimates stock buybacks will increase by 13% in 2024 to $925 billion and will further rise by 16% to $1.075 trillion by 2025. Goldman strategists say “accelerating” earnings growth this year will fuel the demand by companies to buy back their stock.

However, the 5% upside does mean that the golden returns of the year could be in the rearview mirror, Kabra added. The S&P 500 has already rallied about 10% in 2024, and those gains are unlikely to repeat in the short term.

Source: MarketWatch, Yahoo Finance, Reuters