And Then There Was One: the bull market has now stampeded over nearly all the bears on The Street

As the stock market continues to defy expectations and push towards new record highs, Wall Street firms are scrambling to adjust their year-end forecasts for the S&P 500. In recent weeks, at least 11 major firms have revised their targets, with some even exceeding previous estimates by as much as 5%. This sudden shift in sentiment is a testament to the market's resilience and ability to surprise even the most seasoned analysts.
One of the most notable revisions comes from BMO Capital Markets, which has raised its year-end target to 5,600, the highest among the major banks. This implies an additional upside of over 5% above current trading levels. Deutsche Bank has also followed suit, bumping up its target to 5,500. These revisions demonstrate the growing optimism on Wall Street, as firms increasingly believe that the market will continue to outperform expectations.

In contrast, Morgan Stanley's Mike Wilson, one of the last remaining bears on Wall Street, has finally turned bullish. Wilson's new prediction for the S&P 500 calls for a climb to 5,400 by the second quarter of 2025, a significant departure from his previous forecast of a decline to 4,500 by the end of the year. This shift in sentiment is a clear indication that even the most skeptical analysts can be won over by the market's relentless upward momentum.

However, not all firms are as optimistic. J.P. Morgan's Chief Strategist, Marko Kolanovic, remains one of the few bears left on Wall Street, with a year-end target of 4,200 for the S&P 500. This represents a potential downside of 21% from current levels. 

Mr. Kolanovic has had a disastrous run of being on the wrong side of the market over recent years, being the only bull during the early stages of 2022's bear market, and then turning bearish right at the summer 2022 lows, only to hold firm to that view ever since, despite the massive bull market we have seen over the past 22 months.

Despite these mixed signals, the overall trend is clear: the stock market is on the move, and Wall Street firms are scrambling to keep up. As the market continues to push towards new highs, it will be fascinating to see how these predictions play out. Will the market continue to defy expectations, or will it eventually correct? Only time will tell, but one thing is certain: the current bull market is not showing any signs of slowing down anytime soon.

JPMorgan's Kolanovic: A Disastrous Run for the Last Bear

Marko Kolanovic, JPMorgan Chase & Co.'s strategist, is the last prominent bear on Wall Street, standing out in a sea of optimism. Despite the S&P 500 Index reaching record highs, Kolanovic remains pessimistic about the stock market, citing high valuations, restrictive interest rates, elevated inflation, consumer stress, and geopolitical uncertainty as reasons for his negative outlook.

Kolanovic's stance has been hurtful to JPMorgan's model portfolio allocation over the past year, as the global equity markets continued to rise. However, he refuses to change his stance, citing the lack of attractive investment opportunities in the current market.

In contrast, Morgan Stanley's Mike Wilson has recently turned positive on the outlook for US stocks, predicting a rise to 5,400 by June 2025. This shift in opinion has left Kolanovic as the final outlier among equity strategists at Wall Street's major banks. JPMorgan has the lowest year-end target for the S&P 500 at 4,200, implying a drop of more than 20% from Monday's closing level.

Citigroup Inc. has the second-lowest year-end estimate at 5,100, suggesting modest downside from current levels. Goldman Sachs Group Inc. also sees the S&P 500 ending the year with further gains at 5,200. However, neither of these banks' top equity strategists have issued warnings of an impending rout like those from the team at JPMorgan.

Bank of America Corp. and Wells Fargo & Co. see the S&P 500 ending the year with further gains at 5,400 and 5,535, respectively. Both have ratcheted up their original views for this year as the US stock market has extended its climb on economic and corporate earnings strength and continued excitement around artificial intelligence.

Kolanovic's outlook on US equities has failed to materialize for a third-straight year. Despite his pessimistic calls, the S&P 500 Index has risen 11% in 2024. He was also pessimistic through last year's 24% rally and was bullish through most of 2022's 19% wipeout.

The strategist reiterated his defensive portfolio tilt, recommending investors be underweight in equities and credit and overweight in commodities and cash. Kolanovic's persistence in maintaining a bearish outlook is an interesting contrast to the growing optimism on Wall Street.

A Review of Wall Street's S&P 500 Targets

As the market continues to surge, top strategists on Wall Street are revising their forecasts for the S&P 500. In this article, we will delve into the latest S&P 500 targets from various Wall Street firms, analyzing the trends, insights, and implications for investors.

The first thing that stands out is the significant increase in the average S&P 500 target from 5117 to 5289 over the past two months. This upward revision is largely driven by the continued rally in the market, as well as the Federal Reserve's uncertain interest-rate outlook. The median target remains at 5400, up from 5200 over the same period.

It is interesting to note that while some top strategists have revised their forecasts higher, the overall sentiment among Wall Street firms remains cautious. This caution is reflected in the fact that the majority of firms are still projecting a relatively flat market or even a decline in the S&P 500.

The Federal Reserve's interest-rate outlook has been a major factor in the recent market volatility. The uncertainty surrounding the Fed's future actions has led to a mixed view among top strategists on the future performance of the S&P 500. However, as we will discuss later, history suggests that when Wall Street is forecasting downside, the market tends to perform well.

The bottom-up estimates, which are calculated by aggregating the median target-price estimates for all the companies in the S&P 500, paint a more optimistic picture. These estimates suggest an 11% increase in the S&P 500 over the next 12 months, with a target price of 5,856.09. This is significantly higher than the average target of 5289.

At the sector level, the consumer-discretionary and energy sectors are expected to see the largest price increases over the next 12 months. The utilities sector, on the other hand, is forecast to see the smallest advance.

In conclusion, the latest S&P 500 targets from Wall Street firms suggest a mixed view of the market's future performance. While the overall sentiment remains cautious, the bottom-up estimates suggest a more optimistic outlook. 

As investors, it is essential to keep a close eye on the market trends and adjust our strategies accordingly. History suggests that when Wall Street is forecasting downside, the market tends to perform well.