Wall Street Strategists Bullish on S&P 500

The S&P 500 index, a benchmark for the broader U.S. stock market, has recently experienced a surge, prompting Wall Street strategists to revise their year-end targets upwards amid expectations of accelerated growth. This bullish sentiment comes as the index surpassed the 5,000 mark and continues to set new records, fuelled by robust Big Tech earnings and positive surprises in the U.S. economy.

Barclays, among the latest to adjust its projections, raised its year-end price target for the S&P 500 to 5,300 from 4,800, citing the strong performance of Big Tech companies and favourable economic indicators. However, Barclays’ head of U.S. equity strategy, Venu Krishna, indicated that even higher outcomes are plausible. Krishna suggested that if Big Tech earnings continue to outperform expectations, Barclays’ bull case scenario could see the S&P 500 reaching as high as 6,050.

According to Krishna, the risk-reward balance favours the bull case, with macroeconomic data indicating a potential economic re-acceleration that outweighs concerns of a mild recession. Continued outperformance from Big Tech, coupled with an earnings rebound in other sectors, is seen as pivotal for sustaining upward momentum in the index.

Echoing similar sentiments, both Capital Economics and Yardeni Research have proposed bullish scenarios for the S&P 500’s trajectory. Ed Yardeni, president of Yardeni Research, envisions the index reaching 6,000 in 2025 and 6,500 in 2026, driven by sustained economic strength and productivity gains facilitated by technology advancements.

Yardeni emphasised the role of technology in driving productivity growth, which, coupled with the outperformance of the U.S. economy relative to other global counterparts, makes the U.S. market an attractive investment destination.

Similarly, John Higgins, chief market economist at Capital Economics, foresees the S&P 500 potentially hitting 6,500 by the end of 2025. Higgins’ outlook hinges on the expansion of the current AI-fuelled bubble, drawing parallels to the dot-com era, albeit with valuation levels still below historical peaks.

While acknowledging similarities to past market bubbles, Higgins believes there is ample room for further valuation expansion, underscoring the ongoing optimism among investors regarding the transformative potential of technology.

Overall, the consensus among Wall Street strategists points to a bullish outlook for the S&P 500, fuelled by expectations of continued economic resilience, technological innovation, and favourable market conditions. However, the sustainability of this upward trajectory remains contingent on the ability of key sectors, particularly Big Tech, to maintain their growth momentum and navigate potential headwinds in the global economic landscape.