US Stock Bubble to Burst, but S&P 500 Eyes 6000 First
Barry Bannister, the chief equity strategist at Stifel, Nicolaus & Co., said with a wink, "I've seen enough bubbles in the US stock market to know they all pop eventually. But before that, I'm expecting the $S&P 500(.SPX)$ to surge another 10% or so."
He's predicting a wild ride, folks! With investors piling in, he's betting the index will hit a high of 6000 points by the end of 2024. But then, It'll slide back to around 4800 points by mid-2026, a steep 20% drop.
Bannister's got a point when he says risky assets, especially stocks, could see a swift correction. He's even setting a year-end target of 4750 points for the S&P 500, a 13% dip.
He and his team said timing is key, and they know investors in this frothy frenzy won't be too keen on hearing about risks. But hey, you gotta be realistic!
Investors are expecting inflation to cool off, which could prompt the Fed to cut rates this year, keeping the rally alive. Combine that with robust earnings and the AI hype, and the S&P 500 has already soared nearly 15% this year.
But Wall Street's got its warning bells ringing. The market's overbought, and those few strong stocks are carrying too much weight. Strategists' average year-end target for the S&P 500 is around 5297 points, with the highest at 6000 from Evercore ISI and the lowest at 4200 from JPMorgan.
For Bannister, a big risk lies in the crypto market. And inflation's still high, and the Fed could change its cautious dovish stance, adding to the expectation that risky assets, like stocks, will correct.
Remember, Bannister called the market's rally in the first half of 2023 when many others were predicting a recession-induced slump. But now, his predictions show less upside potential, making him one of the few bears on the street.
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