Bank of America analysts led by Savita Subramaniam raised the firm’s valuation for the S&P from 4,000 to 4,300 in a note to clients. This would be the highest level for the S&P since August, although it is only 2% above the index’s 4,200 level on Monday.
Bank of America this weekend raised its year-end price target for the S&P 500 to 8%, citing recent optimism that supported the month’s gains; However, there are a number of emerging factors that call into question the likelihood of a sustained rally.
Bank of America analysts led by Savita Subramanian raised the firm’s valuation for the S&P from 4,000 to 4,300 in a note to clients, citing the companies’ cost-cutting efforts in recent months as well as the boom of artificial intelligence. which led to a resurgence of the tech asset crop.
This would be the highest level for the S&P since August, although it is only 2% above the index’s 4,200 level on Monday.
Bank of America’s bullish forecast came amid a barrage of far more cautious predictions from Wall Street, led by Michael Wilson, the sometimes daring US chief strategist at Morgan Stanley, who wrote on Sunday that the S&P could rise by about 15%. happened. The past six months have largely been little more than a “false headlong rally” driven by “panic buying”.
Optimism fueled by AI advances, a less hawkish Fed and the absence of further geopolitical unrest “will not prevent a deep earnings recession” later this year as higher interest rates eat up economic growth, Wilson explained.
CEO D Bank of America
Earlier market data supports Wilson’s bearish outlook for the S&P: A JPMorgan technical group led by Jason Hunter said Monday that the most “likely” outcome for the index in the coming months is that it hits 3,500. which is a decline of 17%. That would send the market to a nearly three-year low.
The S&P’s strong start to the year comes after its worst year in more than a decade, when it plunged 19% as investors reacted to a sharp change in the Federal Reserve’s easy-money policies throughout the week Was. at an all-time high.
Jerome Powell, Reserva Federal
Slowing inflation, a slow rise in rates and relatively buoyant corporate earnings have supported optimism this year, and even a historic banking crisis in March failed to rouse markets.
Still, nearly all of the S&P’s gains are concentrated in a handful of mega-cap tech stocks, and the lack of market breadth worries many on Wall Street.