S&P 500 Will Soon Break 6000 Milestone, Survey Found, But It May Go Even Higher

After a 23% rally this year, the bull run for the S&P 500 is still not over, thanks to a strong start in Q3 earnings and Fed's easing cycle. Though the benchmark hovers at record highs, the frenzy in US stocks is expected to extend into the rest of the year, and finally break the 6000 milestone, according to the latest Bloomberg Markets Live Pulse survey.

The S&P 500 is expected to come close to breaking 6,000 by year-end, or 2.3% above Friday's close, based on the median estimate from 411 survey participants, which was conducted from Oct. 14-18.

Three-quarters of respondents expect this earnings season to give the market another boost, with the strength of financial results seen as more crucial than the November election or even the Federal Reserve's policy path.

The market is more optimistic toward earnings now. Strong earnings from TSMC and Netflix ignited risk sentiment last week, with both jumping over 5% on a weekly basis. Overall, the results have been positive, with about 70 S&P 500 companies already reporting, and 76% announcing earnings that surpassed estimates, according to Bloomberg.

Looking forward, this week will be more crucial, with roughly 20% of S&P 500 constituents scheduled to release results, including Tesla and IBM Corp. More heavy-weighted tech companies like Apple, Microsoft, and Amazon will post earnings next week.

Survey takers anticipate that the tech giants will push the index higher, as they usually do. A combined 75% expect the Magnificent Seven to either beat or perform in line with the rest of the market this quarter. One reason to remain bullish is that the majority of S&P 500's earnings growth still comes from the Magnificent Seven.

It is also noted that the last 3 months of the year typically represent a bull round for the market. The historical median of S&P 500 returns from mid-October to Dec. 31 is roughly 5%, according to data from Goldman Sachs's trading desk going back to 1928. It's even higher in election years, at about 7%.

The election race is still tight. With Polymarket weighing in, former President Trump has a near 61% chance to win the election. Investors also play that way, with Bitcoin standing above $68,000 and shares of Trump Media & Technology Group jumping 157% from the September low. But in polls so far, Harris is more likely to win.

However, you may not need to worry about the election results, as both candidates seem focused on growth during their presidency. Trump commits to cutting the corporate tax rate, while Harris will focus more on new tech, including AI and EV.

45% of respondents said the strength of earnings matters most for their equity portfolios, compared with 39% pointing to the election outcome and 16% to the magnitude of Fed easing.

Another reason to be bullish is the Fed's potential easing paths. With several strong economic data points so far, traders still bet on a 25 bps cut in November, after an aggressive 50 bps cut in September. A solid economy and the Fed's easing will create a more favorable environment for stocks, and investors will surely cheer about it.