Over the past year, due to concerns about the Federal Reserve's interest rate hikes, many big shots on Wall Street were unable to predict a sharp rise in the US stock market. But as the market expects the Federal Reserve to cut interest rates by the middle of this year, they are eagerly expressing their bullish views on the US stock market.
UBS is the latest bank to raise its expectations for the US stock market. The bank raised its forecast for the S&P 500 index for 2024 by 6% to 5150 points on Tuesday. About a month ago, UBS's target price was still 4850 points.
In addition, RBC Capital Markets also raised its expectations last week, while Goldman Sachs Group Inc. raised its target price in December after setting it in November last year.
UBS strategists Jonathan Golub and Patrick Palfrey emphasized the upward risk of the company's view in their annual outlook released on December 11th, citing strong profits, cooling inflation, the prospect of loose monetary policy, and favorable economic momentum.
In their latest report to clients on Tuesday, the two wrote, "Considering the recent shift by the Federal Reserve, the subsequent decline in interest rate expectations, and the revised 2024 earnings per share above trend levels, we now use this upward scenario as our benchmark scenario."
The US stock market has had an unstable start to 2024 due to concerns that after a significant increase at the end of the year, bullish fundamentals and positions may become overly balanced. The latest fund manager survey by Bank of America Corp. shows that bets on the Fed's interest rate cut have prompted investors to increase their exposure to US stocks to the highest level in over two years.
However, many seller strategists have not retreated due to the risk of overly optimistic markets. Lori Calvasina from Royal Bank of Canada stated last week that the long-term outlook for the US stock market remains optimistic, even though January's weak start was "just the beginning of a turbulent phase.".
She will raise her target price for the S&P 500 index by the end of 2024 from 5000 points at the end of November to 5150 points this month. Last December, David Kostin of Goldman Sachs raised his year-end S&P 500 index forecast to 5100 points, nearly 9% higher than his forecast of 4700 points in mid November.
As of January 16th, the average target price for seller strategists was 4851 points, higher than the 4546 points at the end of November.
Steve Sosnick, Chief Strategist at Yingtou Securities, said, "Strategists, like everyone else, may be attracted by this enthusiasm because no one wants to fall behind, so the target will increase as the market level improves. Nevertheless, I don't remember the target price being raised so quickly after the start of the year, especially when the S&P 500 index hasn't hit a new high."
On Tuesday, Federal Reserve Director Christopher Waller said that if inflation does not accelerate again, the Fed may cut interest rates this year, while emphasizing that the Fed should be cautious and organized in its pace of easing monetary policy, which has dealt a blow to bulls.
Affected by the above comments, the yield of US treasury bond bonds climbed and the stock market fell. Traders cut their bets on the rate cut as early as March and the overall rate cut this year. The S&P 500 index fell by approximately 0.37% to 4761 points.
The yield of US treasury bonds rose due to Bernanke's comments, while the US stock market fell as traders reduced their bets on the rate cut of the Federal Reserve in March at the earliest and the overall easing degree this year. The S&P 500 index closed down about 0.4% to 4765.98 points.