2024 has been good to the S&P 500 already, but look for more
U.S. indexes rise: Nasdaq out front, up ~0.6%
Materials lead S&P 500 sector gainers; Financials weakest group
Euro STOXX 600 index rises ~0.6%
Dollar down; bitcoin slips; gold up, crude rises >1.5%
U.S. 10-Year Treasury yield edges up to ~3.75%
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2024 HAS BEEN GOOD TO THE S&P 500 ALREADY, BUT LOOK FOR MORE
With a little help from the Federal Reserve the S&P 500 has risen a lot this year, but Lori Calvasina at RBC Capital Markets is arguing for more gains in 2025.
RBC's head of global equity strategy research wrote this week that even her group's most generous stress test for 2024 suggests that the S&P 500 is already trading a little above where it deserves to be at year-end 2024.
But citing "consensus views for strong EPS growth and more improvement in inflation, and interest rates" she says there are reasons to be optimistic for further S&P 500 upside in 2025.
Calvasina says she forecasts a trailing P/E for the index for Dec 2024 & Dec 2025 based on views of where PCE, 10-year yields, and Fed Funds are headed.
While not ready to set an official target for end of 2025, Calvasina writes that various stress tests RBC uses for valuation estimates point to 6,200 for the S&P 500 at the end of next year. This is with an EPS forecast of $268, "or ~6,500 using bottom-up consensus EPS of $283.50."
The strategist also nods to history. Since the 1990s, she writes, the S&P 500’s median 12-month gain after a first cut in a new Fed cycle has been 11%. This would take the index to ~6,200 by next fall, Calvasina said, using the close on Sept. 18 (Fed day) as the starting point.
Elsewhere in this week's research files, Sam Stovall, chief investment strategist at CFRA points out that "the S&P 500 notched its 39th all-time high of the year" on Sept. 19th.
This year the record came after recouping losses in the form of a 8.5% pullback from July 16 through August 5, which Stovall cites as the 63rd pullback (as in 5-9% declines) since WWII.
After such recoveries, "history says, but does not guarantee" that the S&P 500 could climb another 8.4% in the following 98 calendar days before slipping into another decline of 5% or more, he says. "While we think the S&P 500 could close 2024 around the 5,800 level, we don’t see it challenging the 6,200 level that quickly," Stovall added.
(Sinéad Carew)
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FOR TUESDAY'S EARLIER LIVE MARKETS POSTS:
YIELD INCREASES NORMAL AFTER RATE CUT, MAY LAST SHORT-TERM - CLICK HERE
TUESDAY'S DATA: CONSUMER FUNK GIVES FED CUT SOME CRED - CLICK HERE
U.S. INDEXES OPEN SLIGHTLY HIGHER, LOSE SOME GROUND AFTER DATA - CLICK HERE
BENCHMARK TREASURY YIELD PERKS UP, AWAITS PCE - CLICK HERE
ANOTHER CUT TO LUXURY EARNING - CLICK HERE
MORE LOVE FOR US SMALL CAPS - CLICK HERE
CHINA POP FOR MINERS, LUXURY AND AUTOS - CLICK HERE
DAX FUTURES HIT RECORD HIGH - CLICK HERE
NO BAZOOKA, BUT CHINA'S LATEST STIMULUS IS A RELIEF - CLICK HERE
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