The S&P 500 index has been in a strong bullish trend this year, helped by the fast-growing technology sector. It has also soared as most analysts boost their earnings estimates for the year and as the Federal Reserve points to three rate cuts.
SPX index Wall Street’s estimatesThe S&P 500 index surged to $5,250 on Thursday, a record high. This means that the blue-chip index has soared by more than 28% from its lowest point in November and by 140% from its lowest level during the Covid-19 pandemic.
There is a possibility that this rebound will continue this year. Besides, the US economy is flooded with potential cash that will find a home in the stock market. Money market funds have over $6 trillion in assets, which could move to stocks if the Fed starts cutting interest rates.
Additionally, the private equity industry is swimming in cash as the amount of dry powder jumped to more than $2.9 trillion. The firms with the most dry powder are the likes of Apollo Global, which has $59 billion. Other notable ones are KKR, CVC, Arduan, and Blackstone.
Analysts are optimistic about corporate earnings. The estimate is that the S&P 500 earnings growth for the first quarter will be 3.4%. If this is correct, it will be the third straight quarter of earnings growth.
Wall Street analysts have a mixed outlook for the S&P 500 index in 2023. Those at Societe Generale believe that the index will end the year at $5,500, 252 points above the current level. Goldman Sachs, on the other hand, sees the index soaring to $6,000.
Yardeni Research and Bank of America believes that the index will jump to $5,400 while Barclays has a forecast of $5,300.
Not all Wall Street analysts are optimistic about the S&P 500 index. JPMorgan, Morgan Stanley, and Wells Fargo see it ending the year below $5,000. The other least optimistic analysts are from BMO, Deutsche Bank, and Citi.
Wall Street's Price Targets for the S&P 500 $SPX pic.twitter.com/cd970EoHnl
— Barchart (@Barchart) March 25, 2024S&P 500 index forecast
Turning to the weekly chart, we see that the SPX index crossed the important resistance level at $4,820 in January. This was an important level as it was its highest point on January 3rd. The index has constantly remained above the 50-weekly moving average.
Notably, the Average Directional Index (ADX) has jumped to over 40 while the Relative Strength Index (RSI) has moved to the extreme overbought point at 80. Therefore, the outlook for the S&P 500 index is bullish, with the next target being at $5,500.
The other scenario is where the index pulls back and retests the support at $4,820 and then resumes the bullish trend.
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