15 September, 2024

Deutsche Bank has increased its year-end projection for the S&P 500 stock index to 5,750 from 5,500 on
grounds of strong buybacks, robust corporate earnings, and solid investment inflows fueled by a
growing appetite for risk.

So, on September 12, strategists at the bank said, “We expect S&P 500 earnings growth to remain strong
in the low double digits, which is pretty normal for growth rates when we’re not in a recession.” The
new target is up by 2.75% from the S&P 500’s close of 5,595.76 last Thursday.

So, people are really hyped about possible U.S. interest rate cuts and all the buzz around artificial
intelligence (AI), and that’s been good for the index. A bunch of brokerages have cranked up their
annual targets, with some even thinking the index might hit 6,000 by the end of 2024. Back in May,
Deutsche Bank bumped up its target to 5,500, counting on solid corporate earnings to back up those
stock valuations.

The bank said that that is, a recent stock market dip in August, driven by concerns over a weakening
labor market and a downgrade in technology stocks, appears to be over. Fears of a slowing labor market
have eased, with August payroll growth stabilizing.

Deutsche Bank pointed to a few things that can get the market going. Those include transitioning from
“de-stocking to re-stocking,” more money spent on stuff outside the tech world, a wider recovery in
manufacturing, and consumers feeling more confident.

The bank expects buybacks to rise to $1.2 trillion next year against $1 trillion now as firms continue to
realign buybacks with earnings growth. Strong inflows into equities over the last four months, contrary
to all seasons, have helped push up corporate earnings and their returns, another boost for corporate
profitability.

Deutsche Bank just reiterated its EPS estimates for companies in the S&P 500, but basically said they
expect $258 for 2024 and $285 for 2025.