Top Wall Street analysts are boosting stock market forecasts as the bull market charges on
Business Insider
- A number of bank research desks have raised their S&P 500 price targets in recent weeks.
- The adjustments come as the index continues its bull market run, up 3% in the last month and 23% this year.
- The S&P 500 has hit 46 all-time highs in 2024.
The bull market hasn't weakened in the fourth quarter, and top bank research desks have been rushing to raise their S&P 500 price targets into year-end.
Strategists from Goldman Sachs, UBS, BMO, and Deutsche Bank have raised their year-end price targets on the S&P 500 in recent weeks as the benchmark index continues to hit record highs. On Monday, it notched its 46th all-time high of 2024.
UBS strategists Jonathan Golub and Patrick Palfrey upped their 5,600 price target to 5,850 for the end of the year, marking their fourth upgrade since late last year.
The target is just slightly above the level the index is trading at on Wednesday, but the analysts forecast a 9% rise in the next 15 months and raised their target for 2025 from 6,000 to 6,400 in a note on Tuesday.
Earlier this month, meanwhile, Goldman Sachs raised its target on the index to 6,000 by December, marking the fourth increase since late last year. The call, from the firm's chief equity strategist David Kostin, is the second highest among those tracked by Bloomberg.
Kostin said the estimates were driven by a steady macro outlook and greater margin expansion.
"The primary driver of the upward revision to our 2025 EPS estimate is greater margin expansion," Kostin said, adding, "The macro backdrop remains conducive to modest margin expansion, with prices charged outpacing input cost growth."
Kostin's price target is just behind that of BMO's chief equity strategist, Brian Belski, who raised his forecast from 5,600 to 6,100 last month. Belski's new target implies a nearly 5% gain through the rest of this year.
Belski said his upgrade was based on strong market gains so far this year, which he says typically leads to stronger-than-normal gains in the fourth quarter.
"We continue to be surprised by the strength of market gains and decided yet again that something more than an incremental adjustment was warranted," Belski said in a note.
He added that Federal Reserve easing and a broadening market rally will only help fuel further gains.
Deutsche Bank also raised its year-end target for the S&P 500 last month, up to 5,750 from 5,500. The bank's strategists pointed to strong corporate earnings and inflows, rising stock buybacks, and higher risk sentiment.
"We see S&P 500 earnings growth continuing to run robustly in the low double digits, in line with typical growth rates outside of recessions," the strategists said in a note.
The strategists' target raises come amid a chorus of strategists turning decidedly more upbeat on the market. JPMorgan's chief equity strategist Dubravko Lakos-Bujas recently recommended investors should get less defensive after a strong September jobs report.
"While it is too soon to assume that this is a turning point, it does suggest that a recession is unlikely in the near term, especially since surprisingly strong job growth and a downtick in the unemployment rate broke a slowing trend in the job market," he said in a note earlier this month.
Lakos-Bujas kept his 4,200 price target for the S&P 500 unchanged, though.
The more upbeat 2024 forecasts come as the bull market charges on, with the S&P 500 up 3.2% in the last month and 22.6% this year. Several risks persist, though, with the upcoming US presidential election in November, an unclear trajectory of monetary policy easing from the Fed as economic data comes in mixed, and as war in the Middle East continues to threaten stability in the region and beyond.
"Fiscal and monetary policy uncertainty, and potential election outcomes, make 2025 returns far from certain," UBS analysts said.