Bank of America sees S&P closing 2024 at 5,000
The good news is investors have already been talking about any potential bad news.
That’s the message from Bank of America Global Research’s equity strategy team led by Savita Subramanian, which sees the S&P 500 (^GSPC) hitting a record-high in 2024 in a year that will be a “stock picker’s paradise.”
The firm sees the S&P 500 closing 2024 at 5,000, up about 10% from its current price, as markets are already past “maximum macro uncertainty.”
“We’re bullish not because we expect the Fed to cut but because of what the Fed has accomplished,” Subramanian explained. “Companies have adapted … to higher rates and inflation.”
Bank of America sees earnings growing 6% in 2024 to $235 per share. Subramanian’s team had previously told Yahoo Finance they not only believe the earnings recession is over but that companies are prepared to excel even if the economy takes a downturn.
“Companies have cut costs and adapted to the weaker demand environment, and saw earnings growing again in 3Q (+3% YoY),” Subramanian wrote. “History suggests earnings typically recover stronger than they fall, as downturns usually remove excess capacity, resulting in leaner cost structure and improved margin profiles.”
Still, Subramanian’s team writes the best path forward for stocks is for earnings to rise with positive GDP, matching BofA economists’ call for no recession in 2024.
Bank of America’s call for stocks to rise as the economy skirts recession is in line with what Goldman Sachs detailed in its own 2024 outlook. Both research teams made clear that the worst-case scenario for stocks would be if the Fed’s interest rate-cutting cycle begins become the economy is headed for recession.
“The bulls should hope for an improving economy, resulting in an easing credit cycle, rather than a dovish Fed driven by a weaker economy,” Subramanian wrote.