Analysts at Fundstrat Global Advisors predict that the S&P 500 Index will reach a record 5,200 points by the end of the coming year.
This forecast is the most bullish among equity strategists on Wall Street, exceeding projections from Deutsche Bank and BMO Capital Markets, which see the index hitting 5,100.
The call suggests approximately 14% upside from the current level. Fundstrat expects earnings-per-share growth of 11.3% to $240 in 2024 and 8.3% to $260 in 2025, driven by a cyclical earnings recovery.
“We are overall positive on equities, but we believe much of the gains will come in the second half of 2024,” writes Thursday in note to clients.
Analysts attribute the positive outlook to lower-than-expected inflation, resulting in a quicker easing of financial conditions and a subsequent drop in interest rates. Despite optimism, they anticipate weak job conditions in the first half of 2024.
The small-cap stocks are highlighted as the top sector pick, contributing to market breadth recovery, with financials, industrials, and technology also deemed attractive.
S&P 500 is up 19.4% year-to-date.