Oppenheimer Asset Management on Monday became the most bullish among global brokerages in its year-end target forecast for the benchmark S&P 500, citing resilient economic data and effective monetary policy.
It lifted its target for the index to 5,500 from 5,200 and also raised its annual S&P 500 earnings-per-share forecast to $250 from $240.
“A shift in (investor) mindset driven not so much by fear and greed but a need to invest for intermediate to longer-term goals suggest to us an opportunity to tweak our target higher,” said John Stoltzfus, chief investment strategist at Oppenheimer in a note.
HSBC earlier in the day raised its year-end target for the S&P 500 to 5,400 from its prior forecast of 5,000, assuming a soft landing for the U.S. economy and implying about 3% upside to the current levels.
The revised target presupposes economic growth to remain resilient and potential rate cuts to bode well for non-technology stocks.
“The higher target stems from better earnings expectations, supported by resilient GDP growth, recent earnings beats and positive sentiment from corporates in the last earnings season,” HSBC strategists wrote in a note.
HSBC joined peers BofA Global Research and UBS in forecasting that the index would end 2024 at 5,400. The S&P 500 on Friday registered its biggest weekly percentage gain of 2024.
The brokerage expects the second half of 2024 to be “more volatile” due to U.S. elections, elevated earnings expectations, and a shifting narrative from “when” to “how much” the Fed will cut interest rates.
The U.S. Federal Reserve left its bank rate unchanged last week and stuck with its projection of three interest-rate cuts by year’s end.
Under its bear-case scenario, HSBC expects a year-end target of 4,800 if economic data continues to run hot, which could lead to a resurgence of inflation.
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