After a decent though uneven run for stocks since January, the stock market forecast for the next six months remains mildly bullish. Big gains in many tech stocks, from giant Microsoft (MSFT) and Oracle (ORCL) to long-beaten-down Palantir Technologies (PLTR), have excited investors.
Perhaps the animal spirits have returned. Beyond the tech stocks, strong moves by consumer growth companies like energy-drink maker Celsius (CELH) have added quality leadership to the market.
But the sanguine outlook could darken quickly if investor expectations for corporate earnings, interest rates and stability of the banking industry take a turn for the worse. And the risks don’t end at U.S. borders. A diplomatic or military event, such as escalation of the Ukraine-Russia war, could chill investors’ mood.
The Federal Reserve is likely not done raising the cost of money to tame inflation. So, interest rates may remain top of mind for investors.
Nonetheless, market veterans see a touch of gains in stock prices ahead.
Stock Market Forecast For S&P 500 At Year’s End
On Friday, the S&P 500 pulled back again and halted a five-week rally. Yet even at the session low of 4343, it had already barreled past many Wall Street firms’ forecasts that it would hit 4200 to 4300 by year’s end.
BCA Research, in a report titled “So Far, So Good On The Road To 4500,” feels “vindicated” that the large-cap stock index at one point pulled to within 2% of its 2023 year-end forecast. But its optimism for the second half of the year? Clearly bridled.
“We remain tactically overweight equities but are preparing to transition to equal weight once the S&P 500 reaches 4500,” the research firm wrote June 18. “Although the index may well peak above our target, we do not expect the rally will last beyond the summer.”
One reason? BCA thinks Wall Street’s forecasts for stocks will “become too buoyant” but “negative surprises will ensue” on the corporate earnings front. BCA also predicts an economic recession will arrive in the first half of 2024.
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