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Wall Street’s Biggest Bull Wishes He Was a Bigger Bull
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Wall Street’s biggest bull wishes he had been even more optimistic. But he’s making up for it now.
“It has become clear to us that we underestimated the strength of market momentum,” Brian Belski, chief investment strategist at BMO Capital Markets, wrote Wednesday morning in a note revising his 2024 year-end forecast to a high of 5,600 street.
Driven by Wednesday moderating inflation numbersshares closed at 5,308, missing Belski’s target of 5.5%.
Underestimation is not what Belski is known for. Last November, the strategist’s team had a high water mark for predictions for 2024 with 5,100, one of the few that dared to surpass the 5,000 mark.
At the time, the index was at 4,550, more than 5% below the January 2022 peak of 4,796.
Belksi’s call proved prescient.
And before the calendar changed, Goldman Sachs, Deutsche Bank and Citi joined BMO at 5,100, with Oppenheimer and Fundstrat taking pole position at 5,200. And while the S&P 500 surpassed all Street forecasts in March, several companies adjusted their forecasts.
BMO did not do so, a move that – once again – would seem prescient as the index fell to 4,967 in April.
“In late February, we decided to draw a line under our 5,100 S&P 500 price target for 2024 as we believed market performance had gone a little too far, too fast,” Belski wrote, referring to to the stock market rocket. trajectory that exceeded 20% in just a few months after its October low.
But this prudence was, in fact, a mistake, said the strategist.
Over the next three months, the stock market’s decline and recovery to a new all-time high (pick your index; they’re all at the peak) is largely due to an alignment in investor expectations and Fed guidance. , what Wednesday’s Retail Sales and CPI Continue in the Right Direction.
“We are comfortable with this because we believe the market is behaving similarly to 2021 and 2023 – years in which we did not give enough credit to the strength of market momentum, something we are trying to avoid this time around,” Belski added. .
The BMO team found that the first two years of this new bull market are behind the average performance seen during the first two years of new bull runs. Thus, with little change in terms of fundamentals or general economic conditions, the revised forecast is supported by sentiment, expectations and the more nebulous aspects of the stock market.
The story continues
While BMO’s new forecast charts a big destiny for bulls, it contains a notable warning about possible turbulence.
“We are still skeptical that the 5.5% drawdown that occurred during March-April will be the worst for the S&P 500 this year, given historical data showing an average drawdown of 9.4% for the second historic year of markets on the rise,” wrote Belski.
A year end of 5,600 with a drop of more than 5.5% between now and then?
This almost seems more optimistic than a simple target of 5,600.
Ethan Wolff-Mann is a senior editor at Yahoo Finance and runs newsletters. Follow him on Twitter @ewolffmann.
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