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With the S&P 500 Index setting record after record, Evercore ISI is predicting another double-digit rally through the end of 2024.\u00a0<\/p>\n
Julian Emanuel, the firm\u2019s chief equity and quantitative strategist, raised his year-end forecast on the S&P 500 Index to 6,000, the highest among major equity strategists tracked by Bloomberg \u2014 and roughly 10% above the gauge\u2019s closing level on Friday. That\u2019s an about face from one of Wall Street\u2019s most prominent bears who previously expected the gauge to finish the year at 4,750.<\/p>\n
Optimism over a resilient economy, improving corporate earnings and the end of the Federal Reserve\u2019s tightening cycle has pushed the S&P 500 up 14% this year, and Emanuel says ebbing inflation and artificial-intelligence fervor will propel stocks even higher. Emanuel\u2019s new estimate tops the 5,600 level Goldman Sachs Group Inc.\u2019s David Kostin, UBS Group AG\u2019s Jonathan Golub and BMO Capital Markets\u2019 Brian Belski are penciling in.<\/p>\n
\u201cThe pandemic changed everything,\u201d Emanuel wrote in a note to clients on Sunday. \u201cRecord stimulus, elevated cash balances and low leverage support the consumer. Then came AI. Today, GenAI\u2019s potential in every job and sector is inflecting. The backdrop of slowing inflation, a Fed intent on cutting rates and growth support Goldilocks.\u201d<\/p>\n
Emanuel also raised his estimate for the index\u2019s per-share earnings in 2024 and 2025 to $238 and $251, respectively. The new levels imply a 8% and 5% profit growth, he said.<\/p>\n
The S&P 500\u2019s jump to 6,000 by late December on EPS of $238 will push the gauge\u2019s price-to-earnings multiple to 25 on a trailing basis, Emanuel said. While definitely elevated by historical standards, that\u2019s still short of the 28 level during the dot-com peak, Emanuel said. He sees a possibility of the 500-member index reaching 7,000 by the end of 2025, he added.<\/p>\n
While AI exuberance has pushed valuations \u201cto the top decile since 1960,\u201d the S&P 500\u2019s price-earnings multiples may remain elevated for \u201cextended periods,\u201d Emanuel said.<\/p>\n
The move comes after Goldman\u2019s Kostin on Friday upgraded the firm\u2019s year-end target for the S&P 500 for a third time, reflecting Wall Street\u2019s optimistic outlook for earnings growth and the US economy. Among the big Wall Street banks, JPMorgan Chase & Co. has the lowest year-end target for the S&P 500 at 4,200, implying a drop of more than 20% from Friday\u2019s closing level.<\/p>\n<\/div>\n