S&P 500 Projected to Reach 5,000 by 2024, Predicts Bank of America
Date: July 6, 2023
Bank of America (BofA) has shared a bullish forecast stating that the S&P 500 is on the path to achieve the 5,000 level by 2024. This projection is based on the ongoing secular bull market, which originated in 2013. BofA's analysis relies on comparing this bull market with those seen in the 1950s and 1980s, showing similarities in their trajectories.
The Impact of the Presidential Cycle
In their analysis, BofA also accounts for the current presidential cycle's likely impact on the stock market. The presidential cycle, marking the four-year term of a U.S. President, is expected to be a strong driving force, potentially pushing stocks upwards till the middle of 2024.
The Potential Upside for S&P 500
Should this forecast hold true, there's a potential upside of approximately 13% for the S&P 500, considering its trading value around 4,400 as of July 6, 2023. Stephen Suttmeier, a technical analyst at BofA, has pointed out the striking similarities between the bull markets of the 1950s and 1980s and the current one, particularly following the recent 24% rally.
A Glimpse into the Future
If the S&P 500 continues to follow the path of the previous bull markets, it could maintain the bull market until at least 2028. Moreover, the index may surpass the 6,000 mark by 2026, according to the analyst's predictions.
The Presidential Cycle and Stock Market Performance
An intriguing aspect of the stock market performance is its correlation with the presidential cycle. Suttmeier mentioned that the S&P 500 often sees stronger performance in the second half of the third year of a president's term if it had an above-average first-half return.
Further, he highlighted that the market tends to demonstrate upward bias from the midterm year low until the end of the Presidential Election year, suggesting that we can expect solid performance heading into an election.
Positive Momentum and Buy Signal
Another key point to note is the upcoming buy signal in the stock market's monthly price momentum. This would be the first buy signal since July 2020, which, based on historical data, has been accurate during past inflection points in the ongoing bull market.
In conclusion, a host of positive factors are currently in play for U.S. stocks. If the bull market continues along its current trajectory, we may see the S&P 500 reaching the 5,000 level even sooner than anticipated.
References:
https://www.bankofamerica.com/
https://www.spglobal.com/spdji/en/indices/equity/sp-500/
https://www.investopedia.com/terms/b/bullmarket.asp
https://www.investopedia.com/terms/p/presidential-election-cycle-theory.asp