Wall Street revamps 2024 S&P 500 targets after record-setting stock-market rally (2024)

By Isabel Wang

A record stock-market rally has caught many of Wall Street's top strategists flat-footed. Now, they're racing to catch up, updating their year-end S&P 500 targets.

Heading into 2024, Wall Street investment banks and research firms largely expected U.S. stocks to post positive yet underwhelming gains after a robust and forecast-defying 2023. Last year's rally left investors to worry whether stocks could build on their gains as interest-rate and inflation threats lingered.

But that cautious outlook was shattered. A renewed wave of AI enthusiasm and reassurance by the Federal Reserve that recent sticky inflation had not changed its plan for three interest rate cuts this year, have sent stocks on a seemingly relentless record-setting run.

The large-cap benchmark S&P 500 index SPX on Thursday notched its 20th all-time closing high in 2024, while the Nasdaq Composite COMP ended at its fourth all-time high and the Dow Jones Industrial Average DJIA scored its 16th record close so far this year, according to Dow Jones Market Data.

The stock rally has surprised Wall Street forecasters and forced some to bump up their predictions of where U.S. equities will go next.

At least six Wall Street banks have lifted their S&P 500 targets over the past two months.

On Monday, Oppenheimer Asset Management lifted its year-end target to 5,500 from 5,200, indicating additional upside of over 5% from Friday's closing level of 5,234.18, said a team of strategists led by John Stoltzfus, chief investment strategist and managing director. They said positive signs in earnings over the last two quarters, resilience in the economic growth and a "substantial capitulation" among the bears and bearish community all support their upgrade to S&P 500's outlook.

Oppenheimer's 5,500 price target appears to be one of the most bullish forecasts among Wall Street's biggest banks and research firms tracked by MarketWatch. Strategists at Société Générale on Thursday also lifted their year-end target to 5,500 from 4,750.

See: 'Keep buying the S&P 500,' says Wall Street's most bullish bank - hikes year-end target to 5,500

Earlier this month, Bank of America's Savita Subramanian and strategists at Barclays joined the bullish club in adopting 5,400 and 5,300 as their year-end targets for the S&P 500, respectively, pointing to resiliency in the economy and earnings strength from megacap technology stocks.

Goldman Sachs in February raised its forecast to 5,200, its second upward revision since late last year. The bank now falls in step with one of Wall Street's most bullish forecasters - Fundstrat's Tom Lee, who also sees a 5,200 finish after accurately foresaw 2023's bull market.

The estimates from strategists put the median target for the S&P 500 at 5,200 by the end of 2024, implying a decline of less than 1% from Friday's level, according to MarketWatch calculations. Heading into 2024, the median target was around 5,000 (see table below).

Not every bank has so far updated its price target for the S&P 500.

 Wall Street firm 2024 S&P 500 target as of March 25 2024 S&P 500 target as of Dec. 11 Oppenheimer Asset Management 5500 5200 Société Générale 5500 4750 Bank of America 5400 5000 Yardeni Research 5400 5400 Barclays 5300 4800 Goldman Sachs 5200 4700 UBS Global Wealth Management 5200 (5500 in upside scenario) 4700 Fundstrat 5200 5200 RBC 5150 5000 Citi 5100 5100 Deutsche Bank 5100 5100 BMO Capital Markets 5100 5100 Wells Fargo Investment Institute 4900 4625 Morgan Stanley 4500 4500 JPMorgan 4200 4200 Average 5117 4891 Median 5200 5000 Source: MarketWatch 

See: What 2024 S&P 500 forecasts really say about the stock market

It is worth noting that some of the doomsayers still sound pessimistic about the stock market in 2024. Morgan Stanley 's Michael Wilson remains one of the most bearish Wall Street strategists, telling Bloomberg last week that he is still standing by his year-end S&P 500 target of 4,500, which is around 14% below the index's Thursday level and 13.5% short of the median call of strategists tracked by MarketWatch.

JPMorgan Chase has the most bearish projection yet among Wall Street firms, seeing the S&P 500 finish the year at 4,200.

To be sure, investors should take forecasts with a grain of salt. MarketWatch reported that Wall Street strategists broadly failed to predict the stock-market rally in 2023, with their median target being around 10% lower than where the S&P 500 settled at the end of 2023.

So much for top-down estimates. How does Wall Street do based on a bottom-up approach?

John Butters, senior earnings analyst at FactSet Research, looked at bottom-up target prices for the S&P 500 calculated by aggregating the median target price estimates, based on company-level estimates submitted by industry analysts, for all the companies in the index.

Historically, Wall Street analysts have overestimated the S&P 500 by about 3% to 8% on average over the past 20 years, according to Butters, but have tended to underestimate the closing price of the S&P 500 over the past few months.

Looking back at this time last year, the bottom-up target price was 4,635.48. Based on Wednesday's finish of 5,224.62, industry analysts in aggregate underestimated the closing price at the end of March 2024 by over 11% nearly a year ago, Butters said in a Thursday note.

Now, Wall Street analysts predict the S&P 500 to advance 7% over the next twelve months, to around 5,589 by March 2025, Butters said, based on the bottom-up approach.

U.S. stocks logged strong weekly gains on Friday, with the S&P 500 and Dow industrials each posting their best week of 2024, while the Nasdaq Composite saw its strongest week since January.

-Isabel Wang

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

 

(END) Dow Jones Newswires

03-25-24 1055ET

Copyright (c) 2024 Dow Jones & Company, Inc.

Wall Street revamps 2024 S&P 500 targets after record-setting stock-market rally (2024)

FAQs

Where will the S and P be in 10 years? ›

Returns in the S&P 500 over the coming decade are more likely to be in the 3%-6% range, as multiples and margins are unlikely to expand, leaving sales growth, buybacks, and dividends as the main drivers of appreciation.

What is the trend of the S&P 500 since inception? ›

The S&P 500 is the standard for measuring overall market returns. There have been many ups and downs in its century of existence, but generally, the index has produced returns over the long run. Since its inception, it has returned 9.81%.

What will the Dow Jones be in 2025? ›

Long Forecast
YearOpen, $Minimum / Maximum, $
December 20244537043694/50272
December 20255647255392/63730
January 20265956152495/60397
December 20265316448342/55620
5 more rows

What happens when a company is added to an index? ›

Once a stock is added to the index, it is argued, demand will increase dramatically—and along with it the share price—as institutional investors rebalance their portfolios. And as long as that demand continues, so will the stock's price premium .

What is the target for the S&P 500 in 2024? ›

The estimates from strategists put the median target for the S&P 500 at 5,200 by the end of 2024, implying a decline of less than 1% from Friday's level, according to MarketWatch calculations. Heading into 2024, the median target was around 5,000 (see table below).

What is the projection for the S&P 500 in 2024? ›

Wall Street analysts' consensus estimates predict 3.6% earnings growth and 3.5% revenue growth for S&P 500 companies in the first quarter. Analysts project full-year S&P 500 earnings growth of 11.0% in 2024, but analysts are more optimistic about some market sectors than others.

What is the most spy has moved in a day? ›

How does SPY usually behave after a large single-day down move in the stock price? Using the 12 largest single-day down moves over the last 3 years in SPY stock, the average move was -3.4% with the single largest daily move of -4.3% occurring on 13-Sep-2022.

What is the 3 year return of the S&P 500? ›

S&P 500 3 Year Return is at 32.26%, compared to 33.72% last month and 58.99% last year. This is higher than the long term average of 23.25%.

How much would I have earned if I invested in the S&P 500? ›

For a point of reference, the S&P 500 has a historical average annual total return of about 10%, not accounting for inflation. This doesn't mean you can expect 10% growth every year; you could experience a gain one year and a loss the next.

Will the Dow ever hit $50,000? ›

To reach 50,000, the Dow wouldn't even need to double — it would require a 31.6% gain from the 38,000 level. If the DJIA companies only earned the current 1.77% dividend yield, it would take 15.6 years for the index to reach the 50,000 mark.

What is the sp500 forecast for 2025? ›

Meanwhile, the median streak of positive returns can extend to 17 months with a gain of 14%, based on historical data. That suggests the S&P 500 could trade to 6,000 by August 2025, and to as high as 6,150 by November 2025.

What will the Dow be in 2027? ›

To some investors, this might seem unlikely. The Dow Jones Industrial Average, an index that has astonished with its ascent over the past decade, likely will continue to astonish through the 2020s, rising to 50,000 by 2027.

What happens when a stock falls out of an index? ›

The opposite happens when a company is removed from the index: the funds sell the stock, which causes the stock price to fall, at least in the short term. The amount can vary greatly depending on the stock, but both inclusions and exclusions have a one-off effect on the share price.

How often does spy rebalance? ›

The frequency of index rebalancing depends on the index in question. Some indexes, like the S&P 500, are rebalanced quarterly, while others are adjusted semiannually or annually.

Do stocks go up after joining S&P 500? ›

Stocks added to the benchmark index often rise in value because funds that track the S&P 500 will add it to their portfolios. The median market cap for companies in the S&P 500 is $33.7 billion.

What will the S&P 500 be in 2030? ›

In terms of a price target, Bank of America is targeting S&P 500 5,150 to 8,700 with its S&P 500 price forecast for 2030.

What is the price prediction for the S&P in 2030? ›

We predict the S&P 500 will increase around 60-80% from its current levels by 2030. However, there is always the chance that unforeseen events could affect these numbers. There is also a small chance that all the factors we discussed above may turn out positively or negatively.

What is the 10 year return of the S&P 500? ›

Average returns
PeriodAverage annualised returnTotal return
Last year30.7%30.7%
Last 5 years15.9%109.5%
Last 10 years15.7%331.4%
Last 20 years10.8%682.2%

What is the sp500 return over 10 years? ›

The S&P 500 has gained about 10.7% on average annually since it was introduced in 1957. The index has done slightly better than that in the past decade, returning about 12.39% annually.

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