04.01.2024 – Forecasts for the coming equity year differ widely among the top names on the US financial market. We shed light on the background.
Opinions differ on the S&P 500. We think so: After the brilliant year-end rally, cashing in is probably the order of the day. Here is the weekly chart.
Quelle: Bernstein Bank GmbH
We will probably see some revisions to forecasts in the coming weeks. This is because some outlooks were delivered before the recent Santa rally.
Goldman and Citi: 5,100
Let’s start with Goldman Sachs. The upmarket address on Wall Street recently raised its target for the SPX at the end of 2024 once again – by a whopping 9 per cent from 4,700 in the previous forecast to 5,100 points.
The reason for the adjustment is the Federal Reserve’s new, dovish tone at the latest meeting and a slowdown in inflation. “Decelerating inflation and Fed easing will keep real yields low and support a price-to-earnings multiple greater than 19x,” said David Kostin, Chief US Equity Strategist. He pointed out that inflation is cooling rapidly and is approaching the Fed’s target of 2 per cent. This means that the central bank will cut interest rates much sooner than investors had previously expected. For similar reasons, Citibank also sees the SPX facing a big year for equities – with a year-end 2024 level of 5100 points as well.
JP Morgan: 4,200
JP Morgan is far more cautious: the investment bank only sees a price target of 4,200 for the S&P 500 and a “downside bias”. The analysts are by no means expecting rapid easing by the Fed. Moreover, global growth is slow, which is overshadowing the outlook for equities. There is only a moderate risk of recession for the global economy. Nevertheless, inflation will remain stubbornly above the central banks’ comfort zones. Current market expectations of an economic upturn in the industrialised countries are therefore likely to be disappointed. Weak growth and geopolitical risks are therefore weighing on equities.
Morgan Stanley: 4,500
Morgan Stanley is also among the pessimists – its target price for the SPX next December is 4,500 points. This is because Europe and the emerging markets could disappoint investors. In the USA, however, a moderate recovery in profits is set to begin. Specifically, it said: “For December 2024, we forecast a 17.0x P/E multiple on 12-month forward EPS (2025) of $266, which equates to a 4,500 price target ~12 months from today. Our 2024 earnings forecast of $229 (+7%Y) assumes 4-5%Y topline growth in addition to modest margin expansion as labour cost pressures ease.” It went on to say that the current market valuation leaves no room for error – many investors have high expectations with regard to inflation, the labour market and corporate margins.
We are excited to see how the stock market develops – we wish you successful trades and investments!
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