According to DataTrek Research's analysis, with the Federal Reserve starting an interest rate cutting cycle last week, the US stock market seems to have a 'profit momentum' in the next year, so the target price of the S&P 500 index in 2024 at 6000 points is not far from the current level.

The S&P 500 index (SPX) hit a new high on Monday, closing at 5718.57 points, according to FactSet's data.

Nicholas Colas, co-founder of DataTrek, stated in Monday's report: "Contrary to the prevailing views in some bearish circles, not only technology and artificial intelligence are driving the profit growth of the S&P 500." He believes that many industries will play important roles in the next year.

Wall Street analysts expect the earnings per share of the S&P 500 index to grow by 15.2% next year, stronger than this year's 10%. Colas cited FactSet data, stating: "The expected profit growth of the S&P 500 is widely distributed across industries, with the most significant growth in cyclical industries such as energy, materials, and industrial sectors."

Colas stated that with the Federal Reserve entering a 'loose mode', even if the US economy continues to grow well, the path of least resistance for the stock market may be upward. In terms of earnings expectations, Wall Street analysts have 'raised' their estimates for the S&P 500 to $258 per share over the next four quarters, an increase of about 12% compared to the past four quarters.

Meanwhile, the price-to-earnings ratio of the S&P 500 is 22.1 times, higher than the five-year average of 19.5 times and the ten-year average of 18 times, which seems 'high', but lower than the peak of 23.2 times in 2020.

Colas concluded that the S&P 500 reaching 6000 points is a 'peak confidence' target price based on optimistic but achievable short-term index profit potential.

After the Federal Reserve announced a significant half-point interest rate cut last week, the S&P 500 index rose slightly on Monday, exceeding the previous record set on September 19.

Vanguard Group's senior portfolio manager John Mazzacane said in a phone interview:"But after the bursting of the internet bubble and the Fed's rate cut in 2001, the ROI dropped by more than 10%.the likelihood has increased." The U.S. economy is resilient, and inflation has eased under a "restrictive" monetary policy backdrop.

He mentioned:"We are essentially recalibrating towards a neutral level now," referring to the Fed starting to lower benchmark interest rates to a neutral level that neither slows down nor stimulates the economy.

The Fed lowered the target range of the benchmark interest rate to 4.75% to 5% last week. According to Mazzacane, the so-called neutral interest rate may be close to 3%.

Interest rates in the bond market have declined this year, with yields on 10-year and 2-year Treasury bonds falling both this month and at the beginning of the year.

According to Dow Jones market data, the 10-year Treasury yield rose slightly to 3.74% on Monday, while the 2-year Treasury yield remained essentially unchanged at 3.576%.

Colas stated that the S&P 500 index reaching 6000 points "is almost not an exaggeration" against the backdrop of rising corporate profits and declining interest rates, representing a 5.2% increase compared to Friday's closing price.

Overall, the US stock market generally rose on Monday, with the S&P 500 index closing up 0.3%, while the technology-heavy Nasdaq Composite Index and the Dow Jones Industrial Average each rose by 0.1%. The Dow Jones index also hit a new all-time high on Monday.