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Bulls continue to run wild on Wall Street.
Monday’s 40th record close of the year for the S&P 500 Index (^GSPC) left the index less than 5% below 6,000.
And with a series of Fed rate cuts on the horizon, some analysts expect the 6,000th milestone to be reached soon.
“With the Fed officially in easing mode, stocks are the path of least resistance, even as the U.S. economy continues to grow at a healthy pace,” DataTrek co-founder Nicholas Colas said in a note to clients on Monday. As the saying goes, we are likely to move towards higher standards.” .
Collas acknowledged that $6,000 is a “peak confidence” price target. But he’s not the only one feeling bullish after publishing his research. Last Thursday, Brian Belsky, chief investment strategist at BMO Capital Markets, raised his year-end target to 6,100 from 5,600, the most bullish view among equity strategists surveyed by Yahoo Finance. is.
“As with our previous target increase in May, we continue to be surprised by the strength of the market rally and have once again determined that more than a gradual correction is warranted,” Belsky wrote.
Perhaps the most impressive thing about Mr. Belsky’s pay increase is that it doesn’t boost his revenue projections for this year. If the S&P 500 were to trade at 6,100 by the end of this year, it would trade at a price-to-earnings ratio of 24.4 times, well above the 10-year average of about 18 times, according to Mr. Belsky’s calculations.
Belsky acknowledged that this “may seem lofty compared to historical norms.” But looking at the closest past parallels is often more convincing than average, with the 1995 soft landing in focus.
“[That was]a time when the index was able to maintain multiples above 20x for several years,” Belsky noted.
Meanwhile, Lori Carbasina, head of U.S. equity strategy at RBC Capital Markets, has yet to move on her target of 5,700 shares.
Calvasina acknowledged that there is “upside risk” to that forecast if the economy holds up. But the strategist warned in a weekly Sunday evening note to clients that good times often come with problems. With the election approaching, the American Association of Individual Investors’ online bullish view is high enough to be read as “risky.”
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These are the kinds of bullish indicators that peaked before the recent drawdown. However, things seem to be a little different this time. When strategists call for the S&P to reach 6,000 as early as 2024, they’re not just talking about the rich boom in artificial intelligence.
The other 493 stocks not included in the Magnificent Seven have increased their profits. The top 10 stocks in the S&P 500 index fell 0.5% from the beginning of July to September 19, while the other 490 stocks rose 6.2%.
Belsky noted that this is the best outperformance of the other 490 stocks in nearly two years. Additionally, 339 of the S&P 500 index constituents have outperformed the index since the start of the third quarter, the highest outperformance record in nearly 22 years, according to Belsky. It seems like the rise in everything is having an effect. market.
“This trend is expected to continue and should help support future market gains, even if MagEx stock’s price and underlying performance continue to decelerate in the coming months.” Belsky he wrote.
With the Fed saga seemingly resolved for now, third-quarter results starting in just over two weeks could be the first in a new bull market, as investors wait to see if other stocks rise. This should be a litmus test. Once tenders are placed, these rising expectations can be met.
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