American Bank Boosts S&P 500 Forecast 12.5% to 6300 Points

The strategy team at an American bank has significantly raised its forecast for the U.S. stock market, highlighting the exceptional resilience of American enterprises. Despite the disruptive trade policies implemented during the Trump administration, U.S. companies have managed to sustain their earnings guidance. The strategy team, which includes Savita Subramanian and Jill Carey Hall, has increased the year-end target for the S&P 500 index from 5600 points to 6300 points, with a 12-month target price set at 6600 points. As of the latest data, the index stood at 6225.52 points.

The strategists emphasized that while the U.S. economy has shown modest performance, American enterprises have distinguished themselves. The stability in corporate earnings forecasts serves as a vital reference for stock investors. In a report released, the strategists noted, "Despite the temporary trade agreement, the enactment of certain legislative measures, and the receding recession risks, policy uncertainty remains near historical peaks, and Treasury yields are at multi-decade highs. However, corporate transparency has remained unaffected."

The new year-end target implies a 1.2% upside from the latest closing price. Previously, strategists from another major financial institution had also raised their year-end and 12-month target prices. The strategists pointed out that most companies continue to issue earnings guidance and highlighted that the dispersion of earnings per share, a measure of earnings uncertainty, has approached the lows seen during the pandemic. The second-quarter earnings season is set to begin shortly.

"Since the onset of the COVID-19 pandemic, fluctuations in exchange rates, inflation, and interest rates have not shaken the profit margins of S&P 500 constituents—companies either successfully adapted or were removed from the index," the strategists analyzed. The S&P 500 index has been on a steady rise since the implementation of certain tariff proposals was temporarily suspended, achieving the best quarterly performance of the year and nearing its historical high.

The strategists noted that, given the recent gains, the short-term outlook for the S&P 500 is "muted." They stated that it is difficult to find positive catalysts to drive the benchmark index to continue its "meteoric rise" in the third quarter. However, the strategists pointed out that, from a medium to long-term perspective, the benchmark index remains "warmly" attractive relative to bonds, even "red-hot." After falling in June, long-term yields have once again approached their year-to-date highs.

The strategists summarized, "The aging population and persistent inflation together form the supply-demand logic against inflation income. In this environment, stocks are clearly more advantageous than bonds."