Bank of America recently stated in a note to clients that the S&P 500 (SPX) index could end 2024 higher than 2023 and possibly reach an all-time high of 5,000.
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The analysts, led by Savita Subramanian, based this prediction on “what the Fed has accomplished” and the fact that the market has “absorbed significant geopolitical shocks already.” According to Subramanian, next year would be a “stock picker’s paradise” as markets move past the maximum macro uncertainty investors faced this year.
Furthermore, the analyst stated that the bullish predictions aren’t based on an expected interest rate but on the fact that companies have adapted to higher rates and inflation. Although macro signals are mixed, she noted that idiosyncratic alpha–the portion of stock returns that aren’t easily replicated–has increased this year.
Meanwhile, Bank of America’s projected year-end target for the S&P 500 in 2023 implies a 1% increase from current levels. Presently, the index is just above 4,550, lower than BofA’s year-end price prediction of 4,600.
How Much Would I Have Earned If I Invested in the S&P 500?
A look at S&P 500 trading data shows that the index has risen by 19.15% on a year-to-date basis, which is remarkable given the prevailing economic conditions. This figure jumps to over 70% when zooming out to the past five years.
