RBC Capital Markets has joined the ranks of those showing optimism for the stock market in the upcoming year, predicting that the S&P 500 will reach a record high.
According to a note published by RBC analysts on Wednesday, the benchmark index is expected to close out 2024 at the 5,000 mark, representing a 10% gain from its closing value on Tuesday. The note stated, “While the November rally has likely pulled forward some of 2024’s gains, we remain constructive on the S&P 500 in the year ahead.”
This forecast aligns RBC Capital Markets with other bullish predictions on Wall Street for the S&P 500 next year. Bank of America, for example, also expects the index to reach 5,000, echoing a similar year-end target set by Phil Orlando, chief equity strategist at Federated Hermes.
The optimistic outlook from RBC is based on five models, encompassing sentiment, valuation and earnings, the economy, politics, and the relationship between stocks and bonds. The analysts pointed to sentiment as being the most influential factor for navigating the US equity market in 2023 and noted that equity valuations can remain higher than many investors realize.
Addressing concerns about the impact of bond market returns on equities, RBC analysts stated that historical data suggests that higher bond returns do not necessarily make equities less attractive. They also acknowledged that the upcoming US presidential election in 2024 could create uncertainty for the stock market, but historically, the S&P 500 has still exhibited solid growth in such election years.
In summary, RBC Capital Markets is anticipating a strong performance for the S&P 500 in 2024, with a record high target of 5,000, supported by positive investor sentiment, robust equity valuations, and various economic and political factors.
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