March 25, 2024

A considerable rally in the stock market has taken many seasoned Wall Street strategists by surprise, sparking a flurry of updates to their year-end S&P 500 forecasts. Prior to 2024, several investment banks and research agencies predicted moderate growth for U.S. stocks, following a strong 2023. However, this apprehensive projection was invalidated as federal assurances and revived AI interest propelled stock prices upwards, defying threats of inflation and high-interest rates.

This bull market enabled S&P 500, Nasdaq Composite and the Dow Jones Industrial Average to record multiple closing highs in 2024. Consequently, Wall Street forecasters who were taken aback by these transcendental performances have adjusted their estimations for U.S equity movements.

Société Générale recently hiked their year-end S&P 500 target to 5,500 from 4,750, potentially pointing towards an additional nearly 5% increment from the closing level of 5,241 on Thursday. Marketwise, this projection appears the most optimistic. Earlier in the month, strategists from Bank of America and Barclays also upgraded their year-end S&P 500 targets citing economic resiliency and robust earnings from mega-technology companies.

Goldman Sachs, another Wall Street giant, revised its estimate upward to 5,200, aligning with some of the consistently bullish forecasters such as Oppenheimer’s John Stoltzfus and Fundstrat’s Tom Lee. The median S&P 500 target projected by strategists is predicted to be around 5,200 by the end of 2024 registered a trivial dip from the prior Thursday’s level.

However, some strategists maintain their bearish stance. For instance, Morgan Stanley’s Michael Wilson persists with his year-end S&P 500 estimation at 4,500, which is significantly lesser than the index’s level on Thursday and the median prediction of other strategists.

A key takeaway for investors is that these forecast should be taken with some skepticism as Wall Street strategists have often deviated from accurate predictions. For example, they erringly underestimated the bullish 2023 market with their median target being approximately 10% lower than the actual S&P 500 level at year-end.

Justifying bottom-up predictions. John Butters from FactSet Research reported that Wall Street analysts contemporarily underestimated S&P 500’s closing price by over 11% as of March 2024, against their collective estimate this time in the previous year. Now, these analysts envisage a 7% increase in S&P 500 over the next year.

Finally, U.S. stocks delivered impressive weekly returns on the preceding Friday with S&P 500 and Dow Jones recording their best 2024 week, and Nasdaq Composite marking its most significant weekly gains since January.