Will the S&P 500 Index rise 19% over the next 12 months?

While the thorough monetary tightening stance by Federal Reserve Chairman Powell casts a shadow on the US stock market, the topic of the factset entitled “The S&P 500 Index will rise 19% over the next 12 months” (9/22) is quite interesting. According to the same topic, according to market analysts' predictions, the S&P 500 index is expected to rise 19% to 5152.11 points over the next 12 months (4330 points on the reference date is 9/21). The basis for 5152.11 points, which is the target stock price, is calculated by aggregating the median target stock price predictions (aggregating target stock prices for individual stocks) of all listed companies included in the S&P 500 Index.

Looking at price increase rate forecasts by sector, the IT sector is at the top of the price increase rate, with +22.7% in the general consumer goods sector, +22.6% in the real estate sector, and 3 sectors such as IT being at the top of the price increase rate, while +10% of the resource sector has sunk to the bottom of price increase rate predictions. Incidentally, “Out of the 11 S&P 500 sectors, which sector are analysts most optimistic about for the 23/4Q?” compiled by the factset on 9/15 The ratio of evaluating the resource sector as a “buy” rose to 64%, suppressing 58% of the IT sector, and the ratio of purchase evaluations was the highest among the 11 major sectors. What the factset is trying to say is that even if buying recommendations gather in the resource sector in the near future, does the IT sector eventually win? In addition to price increase rate predictions for 11 major sectors, the factset also took up the 10 stocks with the largest divergence between target stock prices (median) and closing prices (9/21).

The fact that both the Fed and the ECB have reached the final stage of the interest rate hike cycle was confirmed once again at the previous regular meeting in Europe and America, and the presence or absence of an economic decline highlighted differences in the US and European economies. While views are spreading that the US economy will accelerate again, Europe is in the midst of a recession, as President Lagarde also acknowledged. The remarkable increase in US household assets shows the strength of the US economy. While US household income has increased by 13 trillion dollars over the past 20 years, financial assets have increased 6.5 times to 84 trillion dollars. Of these, just under half, 37 trillion dollars, was a rapid increase due to the monetary and fiscal policies launched by the US authorities after the COVID-19 pandemic. US household financial assets that have swelled after the COVID-19 pandemic have transformed into stocks and real estate, which is why private US consumption has not declined at all. After getting rid of US inflation, if the scenario where the Fed succeeds in making the US economy soft landing (soft landing) becomes a reality, it is likely that adding 5,000 points to the S&P 500 Index will never end in a “dream story.”