SUPERNEWS

Macro

S&P 500 Target Hits 5,415, Stovall Predicts 13.5% Yearly Gain

Stovall raises S&P 500 target to 5,415, fueled by robust earnings and easing inflation, positioning as Wall Street's top bull.

By Bill Bullington

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5/10, 10:43 EDT
S&P 500
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Key Takeaway

  • CFRA's Sam Stovall raises S&P 500 year-end target to 5,415, a 13.5% annual return, citing strong earnings and easing inflation.
  • Stovall's forecast is one of the highest on Wall Street, 6% above the average Wall Street strategist projection of 5,105.
  • S&P 500's rise attributed to megacap tech rally and Fed Chair Powell's comments on unlikely rate hikes; Stovall predicts a further climb to 5,610 in the next 12 months.

S&P 500's Bullish Trajectory

Sam Stovall of CFRA has significantly raised his year-end target for the S&P 500 to 5,415, up from 4,940, marking a 4% increase from current levels and a 13.5% return for the year. This optimistic revision places Stovall among the top bulls on Wall Street, with his forecast trailing only behind John Stoltzfus of Oppenheimer's 5,500 target. The new projection is also notably higher than the average of 5,105 from the CNBC Pro Market Strategist Survey, which aggregates the views of 14 leading strategists. Stovall's confidence is buoyed by a robust earnings season and signs of easing inflation, suggesting a favorable outlook for the market.

Earnings and Inflation Dynamics

The S&P 500 has seen a more than 9% increase this year, fueled by a rally in major tech stocks. Recent comments from Federal Reserve Chair Jerome Powell, indicating that a rate hike is "highly unlikely," have further propelled the market. Stovall highlights the better-than-expected earnings for 2024 and a projected near 15% advance for 2025 as key drivers of his bullish stance. Additionally, the economy's showing signs of decreasing inflation rates adds to the positive sentiment surrounding the market's future.

Federal Reserve's Influence

The market's upward momentum has been significantly influenced by the Federal Reserve's stance on interest rates. Jerome Powell's assertion that a rate hike is unlikely in the near term has sparked a relief rally, reinforcing the bull market's trajectory. This dovish position by the Fed has played a crucial role in shaping investor expectations and market dynamics, contributing to the optimistic outlook for the S&P 500.

Street Views

  • Sam Stovall, CFRA (Bullish on the S&P 500):

    "What is encouraging is we’re continuing to see earnings come in better than expected not only for 2024, but also now a near 15% projected advance for 2025... We’re seeing the economy show trends that we could be seeing inflation come down a bit further." "I think this relief rally has been continuing triggered by Fed Chair Powell’s comments that a rate hike is highly unlikely. So I think this bull market is maintaining its upward trajectory and will do so over the coming 12 months."