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Dow tops 40,000 for the first time: Will the U.S. market rally march on?
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Stock Market Rally Continues, What Wall Street Predicts for S&P 500?

Analysts Notebook joined discussion · May 21 07:21
As the $S&P 500 Index(.SPX.US)$ continues its rally, it has gained 5.4% since May, recouping all of April's losses, setting a newclosingpeak on Monday at 5308.13. Wall Street analysts are hastily revising their target forecasts.
At least 11 Wall Street firms have raised their year-end forecasts for the S&P 500 so far in 2024, according to MarketWatch. Among them, $Morgan Stanley(MS.US)$'s Mike Wilson, who was previously known as one of Wall Street's biggest bears, has now flipped his stance and expects the S&P 500 to hit 5,400 in the next 12 months, up from his prior call that the index would fall to 4,500.
BMO Capital Markets has also lifted its year-end price target for the S&P 500 to 5,600 from 5,100, marking the highest S&P 500 year-end forecast yet.
At $Deutsche Bank(DB.US)$, chief equity strategist Binky Chadha has boosted his year-end target for the benchmark to 5,500 from 5,100 on May 17.
The latest forecasts from Wall Street analysts are as follows:
Stock Market Rally Continues, What Wall Street Predicts for S&P 500?
Why are analysts raising their target prices?
Despite the current high-rate environment, the US stock market has shown renewed optimism regarding companies' profit potential, which has become a major driver of recent market gains. The latest quarterly earnings reports over the last few weeks have revealed what would be the best quarterly profit growth since Q2 2022, according to FactSet. As of last week, 93% of the companies in the S&P 500 have reported actual results for Q1 2024. Of these companies, 78% have reported actual EPS above estimates, which is above the 5-year average of 77% and above the 10-year average of 74%.
According to John Butters, senior earnings analyst at FactSet, industry analysts are projecting an 11% increase in the S&P 500 over the next 12 months, with the bottom-up target price for the S&P 500 reaching 5,856.09, he wrote in a Friday note.
Stock Market Rally Continues, What Wall Street Predicts for S&P 500?
Deutsche Bank analysts anticipate S&P 500 earnings to reach $258 per share in the current year, marking a 13% annual increase. This projection came as they upped their 2024 target for the index to 5,500, surpassing the consensus estimate of 11.1% growth reported by FactSet.
We see the earnings cycle having plenty of legs. While all the growth may not materialize this year, we see market confidence in a continued recovery rising by year end, supporting equity multiples.
Wilson from Morgan Stanley expressed the view that corporations are expected to sustain healthy growth over the next two years in a note,
Our 2024 and 2025 earnings growth forecasts (8% and 13%, respectively) assume healthy, mid-single-digit top-line growth in addition to margin expansion in both years as positive operating leverage resumes (particularly in 2025)
Source: Yahoo Finance, MarketWatch, FactSet
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