UBS has also joined the "club" of raising the target price of the S&P 500 index, and currently expects the benchmark index to reach 5400 points by the end of the year. This is the most optimistic prediction on Wall Street so far, about 9% higher than the current stock index level.
Despite the higher than expected inflation data causing a decline in the stock market last week, UBS stated that strong consumer demand has driven inflation, which is actually a good thing for the stock market.
Analysts led by Jonathan Golub said in a report released on Tuesday, "High inflation often favors stock prices. Although stronger CPI and PPI reports last week triggered market sell-offs, our research suggests that these demand driven data are constructive for future returns."
UBS pointed out that consumer demand is strong, and a series of recent economic data include consumer confidence, employment, and manufacturing data.
This is the second time UBS has raised its target price for the S&P 500 index this year. The bank's forecast for the end of last year was 4850 points, and they raised this number to 5150 points in mid January.
On Tuesday, Goldman Sachs also raised its year-end target for the index to 5200 points. This is consistent with the year-end forecast of Wall Street bulls Tom Lee, who is currently the second highest forecast. And other investment banks such as Bank of America have also hinted that, considering the optimistic sentiment of market investors, they may also raise their year-end targets.
Even well-known bearish Wall Street figure Michael Wilson of Morgan Stanley now predicts that the rise in the US stock market will expand from the technology giant that has dominated the rise so far to a previously neglected area. However, his 2024 target for the S&P 500 index remains at 4500 points.
At the same time, JPMorgan stands out and is on the bearish end. They expect the index to drop to 4200 points by the end of December this year.
UBS wrote in the report, "Although we are optimistic about the outlook, it seems that it is still far from enough."