BoA Also Raises S&P 500 Outlook... 'Wall Street Record High' 5400

Bank of America (BoA) raised its year-end forecast for the S&P 500 index to 5400. This is the highest level among the forecasts released so far by major Wall Street investment banks.

[Image source=Reuters Yonhap News]

On the 4th (local time), BoA announced that it would raise its year-end S&P 500 forecast from the previous 5000 to 5400. This implies an additional upside potential of about 5% from the current level. It also predicted that the S&P 500 would rise by 13% over the course of this year.

This figure matches the forecast previously raised by UBS. According to CNBC, which compiled the year-end S&P 500 forecasts from 14 major Wall Street investment banks, the 5400 forecast presented by UBS and BoA was the highest. The average forecast among these 14 banks was 5032.

BoA explained that it raised its S&P 500 forecast due to corporate profit margins being maintained despite recent high interest rates and inflation. Savita Subramanian, head of U.S. equities at BoA, predicted, "As companies shift towards efficiency and productivity, margin stability will improve."

Recently on Wall Street, forecasts from investment banks expecting further gains in the New York stock market have been rising, based on improved corporate earnings and expectations of a soft landing for the U.S. economy. Earlier, Goldman Sachs, UBS, Barclays, and others also raised their year-end forecasts citing corporate earnings.

However, BoA also pointed out a limitation that this year's S&P 500 rally has been concentrated in a few stocks. BoA explained that only four stocks accounted for 45% of the gains in February. Additionally, Subramanian did not rule out the possibility of a short-term correction despite the recent spread of optimism. He said that uncertainty could be removed after the November presidential election, potentially leading to a market rally and making a year-end rally possible.

Meanwhile, on the same day, the S&P 500 index, which is centered on large-cap stocks, closed slightly lower at 5130.95 compared to the previous session. This is interpreted as a pause ahead of this week’s scheduled remarks by Federal Reserve Chairman Jerome Powell and the employment report, amid concerns over the high price levels.