S&P 500 Sets Sights On 5,400, But Analyst Warns Of Imminent Market Volatility
Bank of America’s equity strategist Savita Subramanian on Sunday revised the year-end target for the S&P 500 to 5,400, up from the previous target of 5,000, signaling a modest 5% upside potential.
Despite a more positive outlook, there’s an acknowledgment of the market’s sentiment improvements, which introduces a layer of uncertainty in the near term.
“The Sell Side Indicator, our key sentiment gauge, has seen increasing equity allocations and is now firmly neutral,” the analyst says, adding that “a neutral call is rarely correct, and the net message of our market timing framework is still, in one word, UP.”
The fair value model suggests a realistic bull to bear case range for the S&P 500, from 4,100 to 6,500.
Earnings Outlook And Economic Indicators
A notable aspect of Subramanian’s analysis is the emphasis on earnings stability and potential for growth, underpinned by leading economic indicators.
The report celebrates a 4% beat in Q4 EPS and identifies factors that could further bolster 2024’s EPS forecast of $235. “Leading indicators argue for upside to our 2024 EPS forecast,” Subramanian says, suggesting a recalibration of expectations in light of recent data.
The narrative around corporate earnings is one of adaptation and resilience. “As we exit an era of arbitrary, low-quality growth…corporates have nimbly shifted focus to productivity,” she says, highlighting a strategic pivot that could sustain earnings momentum.
Sentiment And Market Themes
While Subramanian observes an overall uplift in the market, she urges caution against excessive enthusiasm, particularly in sectors experiencing pockets of euphoria such as AI and GLP-1 therapy.
