RBC Capital Markets has projected a bullish outlook for the S&P 500, forecasting that the index will hit a record high in 2024.

What Happened: According to the analysis published Wednesday, RBC Capital Markets estimates the benchmark index S&P 500 to close at 5,000 in 2024, marking a 10% increase from last Tuesday's closure, reported Business Insider.

RBC analysts penned, "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 projection places RBC in line with other Wall Street optimists like Bank of America and Phil Orlando, Chief Equity Strategist at Federated Hermes, who are also predicting the index to reach the 5,000 threshold.

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The optimism by RBC is grounded on five models encompassing sentiment, valuation and earnings, the economy, politics, and the interrelation between stocks and bonds. In their report, the analysts singled out sentiment as the ideal compass to guide the U.S. equity market in 2023.

On average, the S&P 500 experiences an approximate 7.5% rise in a presidential election year, which is less than the typical growth witnessed by the index. Therefore, the 2024 presidential election could introduce an element of uncertainty to the U.S. equity market, according to analysts.

Why It Matters: The S&P 500's performance is a broad indicator of the health of the U.S. stock market and, by extension, the U.S. economy. Therefore, predictions of the index reaching new highs suggest positive expectations for the overall condition of the U.S. economy in the coming years. However, the looming presidential elections in 2024 could introduce volatility into the market due to potential shifts in policy. As such, investors will likely keep a close eye on political developments alongside economic indicators.

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