These 3 Wall Street strategists nailed the huge stock market rally that shocked most peers. Here’s what they expect to happen next.
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The stock market is up nearly 20% so far this year, officially ending last year’s bear market.
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Few on Wall Street expected the increase – except for Fundstrat’s Tom Lee, Carson Group’s Ryan Dietrick and market expert Ed Yardini.
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Here’s what the three strategists expect the stock market to do in the second half of the year.
Stock market The year-to-date rise of nearly 20% surprised just about everyone On Wall Street – with the exception of Fundstrat’s Tom Lee, Carson Group’s Ryan Dietrick and market expert Ed Yardini.
Each of the three strategists saw something that most of the others did not, mainly inflation mitigation and Avoid stagnation That would help pull stocks out of the bear market of 2022 and reach 52-week highs.
Wall Street is starting to catch up, with many strategists raising the end of the year Standard & Poor’s 500 price targets. So far this year, dozens of prices have boosted their targets, but are still very low, according to data compiled by Bloomberg.
In January, when the S&P 500 was around 3,900, the average year-end 2023 target was just 4,050. Fast forward to today, and the average has risen to 4,245, which is down 7% from current levels.
But Lee, Detrick, and Yardeni don’t see it that way, and they’re getting more and more optimistic than their peers. This is what they expect in the second half of the year.
1. Tom Lee from Fundstrat
In early July, me raised his target for the S&P 500 to 4,825 from 4,750, Which means a full-year uptick of about 26%.
“The rally in stock prices over the past nine months is the beginning of a new bull market. This new bull market will be driven by advances in artificial intelligence and the Fed’s successful efforts to curb inflation,” he said, adding that valuations are “hardly demand” when you exclude stocks of big tech companies.
Lee added, “We believe that price/earnings should expand as companies are seen to be resilient and we are at the beginning of a new EPS cycle.” “Artificial intelligence could be the beginning of a super cycle. W Nvidia’s first quarter results were an “aha” moment. The timing makes sense. Artificial intelligence also solves the problem of inflation. By the way, doesn’t this justify the increase in FAANG? Not as a bubble but as a sign of the onset of this cycle.”
2. Ryan Dietrick from The Carson Group
Detrick recently boosted his price return forecast for the S&P 500 to a range of 21% to 25% from a previous estimate of 12% to 15%.
“We see potential for equities to continue to outperform bonds and potentially make new all-time highs with more good news,” he said.
a resilient economy, with no recession in sight, It means consumers can continue to spend as the Fed continues to lower inflation, according to Detrick. This means that corporate earnings, the main driver of stock prices, must continue to hold. It also helps corporate profits is twice the US dollar, highlighted.
“The pillar of the global economy remains firmly in place, and we expect that whatever is thrown at it will do nothing more than cause some volatility in the near term,” Detrick said.
3. Ed Yardeni of Yardeni Research
Earlier this month, Yardeni He raised his forecast for the S&P 500 to 5400, With the target to be reached by the end of 2024. This represents a potential upside of 19% from current levels.
Yardini’s rise is supported by his estimate of earnings per share on the S&P 500, which could reach $270 in 2025. Those estimates, combined with his forecast of 5,400, imply a forward price-to-earnings ratio of 20x, in line with today’s forward price-to-earnings of 19.5x.
He argued that the economy entered a “rolling recession” last year which slowly affected various industries, but that a “rolling recovery” had begun which should strengthen further upside.
“The S&P 500/400/600 IT stock price indices are likely to lead the fusion, all about to break out to new highs,” Yardini said.
Read the original article at Business interested
