The S&P 500 (^GSPC) took more than two years to gain its last 1,000 points. There’s an increasing number of Wall Street strategists that believe this time, it could take less than a year.
As the S&P 500 recently surpassed 5,000 and continued to hit new records, strategists have raised their year-end targets. The latest is Barclays, which moved up its year-end price target to 5,300 from 4,800 as Big Tech earnings and the US economy continue to surprise consensus to the upside.
But perhaps most notably, the firm isn’t ruling out a better outcome than 5,300 either. Barclays head of US equity strategy Venu Krishna noted that if Big Tech earnings continue to outperform projections, the firm’s bull case of 6,050 for the S&P 500 is likely.
“On balance, we believe that risk/reward is tilted toward the bull case, as macro data suggest that the odds of an economic re-acceleration are beginning to outweigh the probability of even a mild recession, in our view,” Krishna wrote in a note to clients on Tuesday.
Krishna added that continued Big Tech outperformance, combined with an earnings rebound in other sectors, is key.
“If Big Tech extends its beat- and-raise streak and we assume ex-Tech negative revisions have bottomed, we could see the S&P 500 going to 6050 on $252 [earnings per share],” Krishna wrote.
Both Capital Economics and Yardeni Research have recently floated similar scenarios. Yardeni Research president Ed Yardeni has a 5,400 target for the end of 2024 but sees the benchmark hitting 6,000 in 2025 and 6,500 in 2026.
To Yardeni, continued outperformance from the US economy, and an increase in productivity, will drive the upside in stocks.
“The big story is productivity is going to grow,” Yardeni recently told Yahoo Finance. “Technology is going to enable that. It’s not just AI. And in that scenario, I see the stock market continuing to go higher, even if AI turns out to be somewhat disappointing in terms of relative to expectations because the expectations are awfully high right now.”