Citigroup analysts have raised their S&P 500 index goal for the top of this 12 months by 600 factors to 4,600, a revision they mentioned displays the elevated probabilities of a “gentle touchdown” for the U.S. economic system.
“Clearly, we’re chasing the tape,” the analysts mentioned in a Citi Analysis word Friday. “Nevertheless, rising conviction in out-year earnings progress acceleration is a key level of differentiation.”
The S&P 500
SPX,
has seen a robust rally to date this 12 months, ending Friday at 4,582.23. That’s its highest closing worth since April 4, 2022, bringing the index’s year-to-date positive factors to 19.3%, in accordance with Dow Jones Market Information.
Citi additionally raised its mid-2024 goal for the S&P 500 to five,000, from 4,400.
“Little question, these new targets can be perceived as chasing the year-to-date transfer within the S&P 500,” the analysts mentioned. “They higher replicate an evolving macro and elementary backdrop.”
U.S. shares have risen this 12 months towards the backdrop of a resilient economic system and easing inflation, fueling investor hopes that the Federal Reserve could achieve bringing down the elevated price of residing with out inflicting a recession.
“The flexibility of the Fed to completely thread the needle continues to be questionable,” the Citi analysts mentioned. The central financial institution has this 12 months slowed the tempo of interest-rate hikes, that are geared toward reducing inflation.
“The lagging impacts of Fed charge hikes up to now needs to be anticipated to be felt additional into ’24,” the Citi analysts mentioned.
However additionally they pointed to “stronger earnings progress” heading into subsequent 12 months, saying “we glance to purchase pullbacks to place for an earnings progress acceleration name in ’24.”