Is the S&P500 index expected to rise by 19% over the next 12 months?

Amidst Federal Reserve Chair Powell's thorough monetary tightening stance casting a shadow over the US stock market, the topic of FactSet titled 'S&P500 index set to rise by 19% over the next 12 months' (9/22) is quite intriguing. According to the topic, market analysts' financial estimates suggest that the S&P500 index is expected to rise by 19% to 5152.11 points over the next 12 months (compared to the base date of 4330 points on 9/21). The rationale for the target price of 5152.11 points is calculated by aggregating the median target price estimates of all listed companies included in the S&P500 index.

Looking at the predicted percentage increases by sector, the IT sector leads with +22.8%, followed by the consumer goods sector with +22.7%, the real estate sector with +22.6%, and other top-performing sectors. On the other hand, the resource sector's +10% sits at the bottom of the percentage increase predictions. FactSet's query 'Which sector among the 11 sectors of the S&P500 index are analysts most optimistic about for 4Q23?' revealed that the resource sector has a 'buy' rating percentage of 64%, surpassing the 58% for the IT sector, making it the highest buy rating percentage among the major 11 sectors. While short-term recommendations may favor the resource sector, FactSet hints that ultimately, the IT sector may emerge victorious. FactSet not only shares predictions on percentage increases for the major 11 sectors but also highlights the 10 stocks with the largest deviation between the target stock price (median) and the closing price (9/21).

As the Federal Reserve (FRB) and the European Central Bank (ECB) both confirm reaching the final stage of the interest rate hike cycle at their recent meetings in Europe and the USA, the differences in economic conditions between the US and Europe have become more prominent. While there is a widespread belief in the US economy's re-acceleration, as acknowledged by ECB President Lagarde, Europe finds itself in the midst of a recession. The significant increase in US household assets signifies the strength of the US economy. Over the past 20 years, US household income has increased by 13 trillion dollars, with financial assets increasing by 6.5 times to 84 trillion dollars. Nearly half of this, 37 trillion dollars, is attributed to the rapid increase due to the financial and fiscal policies implemented by US authorities post-pandemic. The financial assets of US households that swelled post-pandemic have transformed into stocks and real estate, ensuring that US personal consumption shows no signs of diminishing. If the FRB successfully eradicates US inflation and achieves a soft landing for the US economy, as hinted by a plausible scenario, then it is highly probable that the S&P500 index reaching 5000 points is not merely a 'pipe dream.'