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Oppenheimer boosts S&P 500 price target

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Oppenheimer strategists have raised their year-end target price for the S&P 500 to $5,900, up from $5,500, along with an increased earnings projection for the index. This marks the firm’s third price target adjustment for 2024, initially set at 5,200 last December 11.

The latest bullish outlook is supported by S&P 500 earnings results over the last three quarterly reporting periods, alongside economic data showcasing resilience, driven by the Fed’s cautious monetary policy, Oppenheimer noted.

“An innovation cycle that could benefit all 11 sectors of the S&P 500 that shows signs of being both cyclical and secular coupled with cross generational demographic needs that suggest a shift in mindset regarding equities that appears driven adds in our view further support to the case for equities at this time,” strategists said.

On March 25, after the S&P 500 surpassed the initial 5,200 target, the strategists hinted at the possibility of another upward revision should their economic and market outlook prove too conservative.

With the S&P 500 recently closing at a record high of 5567.19, the new target of 5,900 implies a potential gain of just under 6% from the current level, strategists pointed out. This forecast considers typical uncertainties related to economic data, earnings results, and domestic and geopolitical risks.

When Oppenheimer first set the target last December, it projected a 13% upside for the S&P 500 by year-end, based on expectations of the Federal Reserve maintaining a cautious approach in fulfilling its mandate.

The investment bank anticipated the Fed would continue its pause on rate hikes, initiated in June 2023, and despite some economic slowing, saw a lower likelihood of recession due to persistent economic resilience and the Fed’s sensitivity to higher-than-expected inflation, which made the 2% inflation target elusive.

At the end of last year, Oppenheimer expected one or two rate cuts from the Fed, one less than the three forecasted by the Fed in December, and significantly fewer than the cuts priced in by the Fed Fund Futures at that time.

“Now just days past the mid-year point of 2024 we expect the Fed to cut once or twice late in the fourth quarter as a “good faith down payment” for Main Street and Wall Street signaling that the central bank is getting closer to an end of the current rate hike cycle if not quite there yet,” strategists continued.

“We would be surprised if the Fed were to cut interest rates as early as September as more than a few market participants are expecting based on the futures that track Fed funds rate expectations,” they said, adding Powell and his colleagues likely want to keep Fed policy independent of politics.

Alongside a year-end price target hike, Oppenheimer also raised its 2024 earnings projection for the S&P 500 to $255, up from $250.

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