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S&P 500 Hits New Highs, But Analysts See More Growth Ahead

AInvestThursday, Jul 11, 2024 7:51 am ET
2min read

As the S&P 500 index broke through 5,600 points for the first time on Wednesday, marking the 37th record high this year, Wall Street is increasingly convinced that the bull market in U.S. stocks will continue.

This week, another Wall Street investment bank raised its year-end target for the S&P 500 index, indicating that they believe 5,600 points is far from the end of this round of growth in U.S. stocks.

Wall Street Has Been Fully Occupied by Bulls

Oppenheimer, a Wall Street investment bank, raised its year-end forecast for the S&P 500 index from 5,500 points to 5,900 points, which is nearly 5% higher than Wednesday's closing price. This shift makes the firm the second most optimistic on Wall Street, just behind Evercore, which called for a 6,000-point target last month.

Currently, Wall Street has been fully occupied by bulls. In addition to Oppenheimer and Evercore, among the largest banks on Wall Street, UBS and Goldman Sachs have the highest expectations for the S&P 500 index, predicting it could reach 5,600 points by the end of the year.

At the same time, there are now almost no bearish analysts on Wall Street.

Last week, one of the last remaining bears on Wall Street—Marko Kolanovic, former Chief Market Strategist at J.P. Morgan—left the bank. And Mike Wilson, the well-known big bear and Chief U.S. Equity Strategist at Morgan Stanley, also surrendered in May, raising the S&P 500 target from 4,500 points to 5,400 points.

No Need to Worry About the U.S. Stock Market's Growth Being Too Concentrated?

John Stoltzfus, Oppenheimer's Chief Investment Strategist, said in the report raising the S&P 500: Just like before, it's a matter of the fundamentals, where they stand right now. It includes the resilience of the consumer, even as the economy slows, quite a bit of resilience there — the resilience in business, job growth, wage growth.

His argument also refutes recent concerns about the U.S. stock market's growth being too concentrated. A few tech stocks such as Nvidia have been dominating the S&P 500 index, which has made investors doubt the sustainability of the current growth in U.S. stocks.

However, Stoltzfus pointed out that although the returns of the big seven are indeed more than double those of other components of the S&P 500 index, other sectors of U.S. stocks have also risen sharply since the low point in October last year.

He added that considering this perspective, the scope of the S&P 500 index's rise has indeed been expanding. This growth should not stop, and investors are expected to continue to expand the scope of the rise.

Stoltzfus said, It's driven a lot by intermediate- to longer-term investors, some of which are just the citizenry recognizes that there are real threats to Social Security stability, and people realize they need to play a role in their retirement.

However, Oppenheimer is not very optimistic about the Federal Reserve's interest rate cut. Although the Federal Reserve is likely to cut interest rates later this year and boost the stock market, Oppenheimer does not agree with the market's optimistic view of the rate cut in September.

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