The Zhitong Finance App learned that a new high in the US stock market caught Wall Street's top strategists by surprise, prompting many to quickly revise their year-end S&P 500 targets to adapt to gains that far exceeded expectations earlier this year.

So far, at least 11 major Wall Street banks have raised their year-end S&P 500 forecasts. In the past week alone, BMO Capital Markets and Deutsche Bank raised their 2024 targets to 5,600 points and 5,500 points, respectively.

BMO's new target is 5,600 points, which appears to be the most optimistic forecast from Wall Street's largest banks and research institutions, meaning there is still room for more than 5% increase from Monday's trading levels.

Entering 2024, Wall Street companies generally expect the US stock market to achieve positive but moderate growth, continuing the strong performance of 2023. Despite a brief decline in April, stock prices continued to rise. The three major indices hit record highs several times last week, thanks to the strong performance of large technology stocks.

The May rally also forced one of Wall Street's most famous bearers to turn bullish and raised predictions about future stock market movements. Mike Wilson, US chief stock strategist at Morgan Stanley, said he expects the S&P 500 index to climb to 5,400 points by the second quarter of 2025.

Although Wilson's prediction time was different compared to other banks' year-end goals, the shift in his opinion was significant. Earlier, he predicted that the S&P 500 index would drop to 4,500 points in the fourth quarter of this year.

After Wilson turned to a bullish stance, Dubravko Lakos-Bujas, J.P. Morgan's chief global stock strategist, became one of the few bearers on Wall Street. J.P. Morgan Chase set a year-end target of 4,200 points in November, which means a 21% drop from Monday's level.

According to foreign media calculations, strategists' new forecasts set the S&P 500's year-end average target of 5,289 points, less than 1% lower than Monday's level. Entering 2024, the average target is about 5,117 points (see table below). Not every bank has updated its target price for the S&P 500 index.

Andrew Greenebaum, senior vice president of equity research product management at Jefferies, said that although some top strategists adjusted their forecasts as the S&P 500 index continued to rise, Wall Street generally “maintained a fairly consistent pessimistic outlook on the market” due to the uncertain outlook for the Federal Reserve's interest rate.

However, since 2000, when Wall Street predicted a decline, the future performance of the S&P 500 index was “pretty good”. The average performance for the next six months was 6.3%, while the return for the next 12 months was 13%, as Greenebaum pointed out in a report on Saturday (see table below).

Of course, although top-down estimates have mixed opinions on the future trend of the stock market, the S&P 500 index's bottom-up target price paints a more optimistic picture. These bottom-up estimates are calculated by compiling the median target price of company-level estimates submitted by industry analysts for all companies in the S&P 500 index.

FactSet's senior earnings analyst John Butters said that industry analysts expect the S&P 500 index to grow 11% over the next 12 months, and the bottom-up target price will reach 5856.09 points, he wrote in a report on Friday.

Butters pointed out that at the industry level, the consumer and energy sectors in the S&P 500 index are expected to see the biggest price increases in the next 12 months, while the utilities sector is expected to see the smallest increase.