Wall Street turns bullish on stocks as talk of ‘soft landing’ intensifies


Economic data continued to come out stronger than expected, prompting economists to backtrack on their calls for a recession and consequently Increasingly paid Wall Street strategists are getting more bullish on stocks.

On Tuesday, Jefferies raised its year-end target for the S&P 500 from 4,050 to 4,500.

“With a soft landing now the more likely outcome, earnings will be more resilient than previously anticipated,” Jefferies global head of micro-strategy Desh Permunetilleke said.

With artificial intelligence muster it Price targets sent higher ahead of the summer now Cool off during the second quarter earnings reportsStrategists turned to the resilient US economy as the next catalyst to support the market rally.

from Cry Taylor Swift and Barbie At the Fed’s most recent press conference, on GDP Surprise to the upside In the second quarter, the American consumer who remains willing to spend more than many believe has been at the forefront of the economic story during the summer of 2023.

And each A more rosy data point than expected Rolling over, discussions about the so-called “soft landing” The conclusion of the Fed’s hike cycle, in which inflation stabilizes without economic growth experiencing a major downturn, has intensified and is the latest talking point strategists make when explaining why the S&P 500 is likely to end higher in 2023. than Wall Street expected.

On July 31, Scott Kronert, managing director of CityCity, raised the S&P 500’s closing price for 2023 to 4,600 from 4,000 and its mid-2024 target to 5,000 from 4,400. Kronert wrote that the new target reflects “an increased probability of a soft landing.” On August 1, Oppenheimer Asset Management boosted its year-end price target for the S&P 500 to 4,900 from 4,400.

“The price target assumes that the resilience demonstrated by the US economy will continue combined with a high level of sensitivity by the Federal Reserve to raise its benchmark rates further to slow the inflation rate toward its 2% target,” John Stoltzfus, senior investment strategist at Oppenheimer wrote.

personal consumption It makes up about 70% of the US GDP and many indicators that contribute to consumption have shown resilience. his labor market Epidemic pay off But he Still adding jobs Along with a historically low unemployment rate and wage increases. Early indications are that consumers continued spending to start the third quarter as well, with the retail sales report for July It shows sales increased by 0.7% in the month.

Although not very hot, economic indicators are showing signs of what Goldman Sachs chief economist Jan Hatizos has called Unbelievable growth. This may be enough to keep stocks higher while offering buying opportunities in certain sectors.

On Monday, Bank of America promotion Consumer discretionary sector (xly) to Overweight from Underweight, citing her economic team’s recent call that the Fed’s rate hike cycle It will not end in stagnation.

Our economists are expecting a soft landing, but investors seem to be bracing for [Great Financial Crisis]Similar to a recession,” Subramanian wrote in a new note on Monday. The relative weight of active funds in consumer appreciation is at an all-time low in our data history for both long-term funds and hedge funds. “

A trader works at the New York Stock Exchange (NYSE) in New York City, US, July 26, 2023. REUTERS/Brendan McDiarmid

Josh Shaffer is a correspondent at Yahoo Finance.

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