Bank of America Corp.’s Savita Subramanian has joined the chorus of bullish voices on Wall Street, revising her target for the S&P 500 Index upward in response to the market’s surprising rally. Subramanian, BofA’s head of US equity and quantitative strategy, now anticipates the benchmark to reach 5,400 by year-end, up from her earlier projection of 5,000, signaling a potential 5% gain from current levels. This adjustment reflects optimistic indicators pointing to robust earnings growth and resilient profit margins.
In a note to clients, Subramanian emphasized that despite the market’s upward trajectory, it has yet to reach the euphoric phase typical of bull market peaks. While sentiment has improved, she noted that excessive exuberance remains limited.
BofA’s revised price target for the S&P 500 places it among the most bullish forecasts on Wall Street, aligning with projections from other prominent strategists like Ed Yardeni of Yardeni Research and Jonathan Golub of UBS Group AG.
The frenzy surrounding artificial intelligence has caught many forecasters off guard, prompting a flurry of target revisions among strategists eager to keep pace with the accelerating market rally. Recent weeks have seen Piper Sandler & Co., UBS, and Barclays Plc all raising their forecasts, with Goldman Sachs Group Inc. and UBS adjusting theirs multiple times since December.
The S&P 500’s breach of the 5,100 milestone for the first time in history underscores the market’s momentum, surpassing the average year-end forecast. BofA’s optimism is buoyed by leading indicators suggesting potential upside to earnings-per-share estimates, driven by expectations of robust economic growth and increased profits.
Despite the strong start to the year, Subramanian warns of a possible near-term pullback fueled by growing bullish sentiment across Wall Street. BofA’s Sell Side Indicator, which tracks stock allocation recommendations by US sell-side strategists, is inching closer to a contrarian “sell” signal, raising caution.
While some analysts, like Piper Sandler’s Michael Kantrowitz, have adjusted their forecasts upward, others, including John Stoltzfus of Oppenheimer Asset Management and Thomas Lee of Fundstrat Global Advisors, maintain bullish outlooks for the S&P 500.
Even bearish voices, like Morgan Stanley’s Mike Wilson, acknowledge the potential for broader market gains beyond tech giants. However, Subramanian predicts a shift in market leadership away from a handful of megacap stocks towards a more diversified landscape.
As earnings season unfolds, investors await results from key companies like Target Corp., Kroger Co., Gap Inc., and Foot Locker Inc. for further insights into consumer health and market dynamics. Despite some earnings surprises, Subramanian remains optimistic about the market’s trajectory, albeit cautious of potential headwinds.
