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Why the S&P 500 is About to Skyrocket 100% in 5 Years
O bull run in stocks may have more room for a stampede.
“We’re at the beginning of a bull market where the earnings recovery story has barely begun,” Bradesco BBI’s head of equity strategy, Ben Laidler, told Yahoo Finance’s executive editor. Brian Sozzi at the Initial bid podcast (video above; listen at here).
Laidler, whose resume includes stints at HSBC and JPMorgan, believes there is a likelihood that two interest rate cuts this year by the Fed — which should further fuel investor enthusiasm, in addition to the expected strong earnings growth.
Those factors could help drive shares up at least 100% over five years, Laidler said.
“Earnings could easily grow by 15% a year if the economy keeps growing and you have a little bit of multiple expansion, which I think lower interest rates would justify,” he said.
The current stock bull market is expected to begin in October 2022, when the S&P 500 (^GSPC) hit its most recent low. Since then, the index has gained an incredible 55%. The index has gained nearly 17% so far this year, reaching its latest record on Friday.
Earnings were driven by enthusiasm around AIthat boosted names like Nvidia (NVDA) and Apple (AAPL) for record highs.
This year, momentum has driven the Dow Jones Industrial Average (^DJI) beyond 40,000 and the S&P 500 beyond 5,000.
The S&P 500 is in the midst of its 16th strongest start to a year since 1950, according to data from Truist’s chief market strategist Keith Lerner. The S&P 500 has risen in seven of the past eight months.
Part of Laidler’s thesis will be put to the test in the upcoming earnings season, which kicks off with results from banks like JPMorgan (JPM) and Wells Fargo (WFC).
FactSet estimates second-quarter earnings growth for S&P 500 companies at 8.8%. If achieved, it would mark the highest year-over-year growth rate since the first quarter of 2022. It would also represent the fourth consecutive quarter of year-over-year earnings growth for the index.
Double-digit percentage growth is expected in profits for the Communication Services (18.5%) and Information Technology (16.1%) sectors.
“We are in a market with very fundamental support. Earnings are recovering and rate cuts are coming,” Laidler added.
The outlook for AI stocks still looks strong despite the big gains, Goldman Sachs portfolio manager Brook Dane said in Initial bid. Listen below.
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Three times a week, executive editor of Yahoo Finance Brian Sozzi Insightful, market-focused conversations and chats with the biggest names in business Initial bid. Find more episodes on our video center. Watch on your preferred streaming service. Or listen and subscribe at Apple Podcasts, Spotifyor wherever you find your favorite podcasts.
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