Top Line
Bank of America raised its year-end price target for the S&P 500 this weekend to 8%, citing recent optimism that supported a months-long stretch of gains, though a variety of factors emerge. That calls into question the prospect of a sustained rally.
Morgan Stanley is eyeing Bank of America’s target of 4,300 for the S&P 500.
important facts
Bank of America analysts led by Savita Subramanian raised the firm’s S&P target from 4,000 to 4,300 in a Sunday note, citing the companies’ cost-cutting efforts in recent months as well as the artificial intelligence boom. Promoted resurgence in one. Technology stocks crop up.
This would be the S&P’s highest level since August, although it is only 2% higher than the index’s 4,200 level on Monday.
Bank of America’s bullish forecast came amid a flurry of far more cautious predictions from Wall Street, led by Morgan Stanley’s perpetually bearish chief U.S. strategist Michael Wilson, who wrote on Sunday that the S&P’s nearly 15% gain over the past six months has That’s a little over 15% over six months. A “head fake rally” inspired by massive “panic buying”.
Wilson explained that optimism from AI advances, a less aggressive Federal Reserve and a lack of fresh geopolitical disturbances on deck “will not prevent a deep earnings slump” later this year, as higher interest rates continue to eat up economic growth. Are.
Pre-market data supports Wilson’s bearish stance for the S&P: A JPMorgan technical group led by Jason Hunter said Monday that the most “likely outcome” for the index over the next few months would be as low as 3,500 , which is a drop of 17%. Will take the market to the lowest level of about three years.
main background
The S&P’s strong start to the year followed its worst year in more than a decade, when it shed 19% as investors reacted to the Fed’s dramatic reversal on its easy-money policies during the pandemic, which sent the index allowed for the all-time rally. High. This year, easing inflation, slower rate hikes and reasonably healthy corporate earnings have supported the rally, and not even a historic banking crisis in March could sway the markets. Still, with nearly all of the S&P’s gains concentrated in a handful of mega-cap technology stocks, the lack of a market cap is a concern for many on Wall Street.
important quotes
The idea of no materially bad news, such as an unexpected spike in inflation or a monumental geopolitical event like Russia’s invasion of Ukraine, moving stocks up is “long in the tooth” and won’t hold the S&P in for much longer. May, Tom Essay Essay report was written on Monday. He said there needs to be “real positive resolution” from stressful market-driving events for the S&P to justify further gains.
what to watch
Investors are paying close attention to the ongoing US debt ceiling impasse, as the United States looks to default on its debt for the first time in its nearly 250-year history. And even if the US avoids a default, a liquidity crunch arising from the prospect of a bond issuance by the Treasury Department raising its debt limit “will be the catalyst that ends this bear market rally.” It is possible”.
Further reading
This stock market indicator is the weakest it’s ever been—and other warning signs are flashingforbes,
Stocks ‘Stuck’ Amid Debt Limit Crisis — But These Investments May Be Best Amid Turbulenceforbes,
Fund managers have been most pessimistic this year—here’s what worries themforbes,
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