RBC Capital Markets Predicts S&P 500 to Hit 5,000 Next Year
In a note published on Wednesday, RBC Capital Markets expressed their bullish outlook for the stock market in 2024, predicting that the S&P 500 would reach a record high. The analysts forecasted that the benchmark index would end the year at the 5,000 mark, representing a 10% gain from Tuesday’s close.
The bullish sentiment from RBC puts them in line with other Wall Street forecasts, as Bank of America also predicted the index to hit 5,000. The optimism for next year’s stock market performance has been attributed to strong investor sentiment and buoyant equity valuations.
RBC’s forecast is supported by five models that analyze sentiment, valuation and earnings, the economy, politics, and the dynamic between stocks and bonds. In particular, analysts highlighted sentiment as a key factor for navigating the US equity market in 2023, calling it “the best star in the sky.”
The note also emphasized that equity valuations could remain higher than many investors currently perceive. Additionally, the analysts addressed concerns about higher bond yields potentially making equities less attractive, stating that historically, the stock market has continued to rise solidly in similar scenarios.
However, the upcoming US presidential election poses a potential source of uncertainty for the stock market. On average, in a presidential election year, the S&P 500 rises by around 7.5%, lower than its usual growth. Analysts noted that the unusual aspects of the 2024 contest add another layer of uncertainty for stocks in the coming year.
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