It took over two years for the S&P 500 index to reach a new level of 5000 points this month. However, some Wall Street strategists currently believe that it may only take less than a year for the S&P 500 index to break through the next thousand point mark
With the S&P 500 index recently breaking through 5000 points and continuously reaching historical highs, many Wall Street institutions have recently further raised the index's year-end target level. Recently, Barclays Bank raised its year-end target price from 4800 points to 5300 points in anticipation that the US stock market will continue to benefit from the lucrative profits of large technology companies and the unexpectedly strong performance of the US economy.
But perhaps the most noteworthy thing is that the institution does not rule out a better situation than 5300 points.
Venus Krishna, head of US equity strategy at Barclays Bank, pointed out that if the profits of large technology companies continue to exceed expectations, the company believes that the S&P 500 index may reach 6050 points.
Krishna wrote in a statement to clients on Tuesday, "Overall, due to recent macro data, we believe that risk/return tends towards a bull market. In our view, the likelihood of the economy accelerating again has begun to surpass even the possibility of a slight recession."
Krishna also pointed out that the sustained exceeding expected performance of large technology stocks, coupled with profit rebounds in other industries, is becoming the key.
Krishna wrote that under optimistic circumstances, if large technology companies can continue the current upward trend and assume that sectors other than technology companies have bottomed out, the S&P 500 index is expected to reach a staggering 6050 points, at which point the earnings per share of its constituent stocks will reach $252.
Of course, in a pessimistic situation, if large technology companies start to fail to meet their high quarterly earnings standards and the macroeconomic environment unexpectedly deteriorates, the index may drop to 4500 points, and earnings per share will drop to $221.
Is the 1000 point mark not out of reach?
It is worth mentioning that, in addition to Barclays, Capital Economics and Yardeni Research have recently made similar bold bull market predictions. Ed Yardeni, President of Yardeni Research, has set a target of 5400 points by the end of 2024, but believes that the index will rise to 6000 points by 2025 and reach 6500 points by 2026.
In Yardeni's view, the sustained unexpected performance of the US economy and the improvement in productivity will drive the stock market to continue to rise.
Yardeni said in an interview, "The most important thing is that productivity will improve. Technological development will facilitate this. This is not just because of artificial intelligence. In this situation, I believe the stock market will continue to rise, even if artificial intelligence is somewhat disappointing compared to expectations because current expectations are too high."
Yardeni also added, "It seems that the United States will continue to be an excellent market, a unique market. I think this will be an important part of the future narrative for me, and it is also the reason why I believe the market can continue to rise."
John Higgins, Chief Market Economist at Capital Economics, predicts that by the end of 2025, the S&P 500 index will reach 6500 points. This outlook depends more on whether the current artificial intelligence driven foam will grow. For now, he insists that transactions similar to foam in the market can make this benchmark index reach 6500 points by the end of 2025.
Higgins wrote, "We expect the S&P index to reach 6500 points by the end of 2025 on the premise that its valuation reaches a level similar to the peak in the Internet frenzy period. The foam that is forming in the S&P 500 index is similar to the foam that was formed in the second half of the 1990s in many aspects, especially the market is trying to capture the way that transformative technologies can make profits in the future."
"Nevertheless, the current market valuation indicators are still far below the level at that time, indicating that there is still a lot of room for expansion," Higgins said.