Stocks slide after Fed pauses, hints at higher interest rates for longer: Stock market news today

Bank of America boosts S&P 500 year-end target

With fears of another Fed rate interest hike and a consumer slowdown looming, there’s plenty for stock market bears to point too when making the case for stocks to decline as 2023 comes to a close.

But Bank of America’s head of US equity & quantitative strategy Savita Subramanian has a simple message for investors courtesy of a reggae music legend: “Don’t worry, be happy,” Subramanian wrote in a new note to clients on Wednesday.

Bank of America boosted its year-end target for the S&P 500 to 4,600 from 4,300 in the note. That would reflect about 3% upside from the S&P 500’s current levels.

‘“Recession averted” says the consensus economist, but a fresh wave of bear narratives around equities have emerged,” Subramanian wrote. “The net message of our five target indicators is bullish, yielding a new 2023 year-end target of 4600, up from 4300.”

Bank of America’s year-end 4600 call for the S&P 500 is one of the highest among Wall Street strategists tracked by Yahoo Finance. That’s a good sign, according to BofA’s research.

“Stocks discount expected growth but react to surprises,” Subramanian.

Based on data since 1999, BofA found the average S&P 500 year-end target at the end of August typically projects 5% gains through the end of the year. In the rare years when strategists see the benchmark index declining from it’s August close, the S&P 500 has risen every time and boasts better average returns than when strategists had predicted gains for the S&P 500.

At the end of August this year, strategists S&P 500 targets suggested 2% downside. So even as the macro headwinds mount, maybe there still could be room for another surprise to the upside.

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