Wells Fargo analysts on Friday reaffirmed their year-end target of 5,535, an increase they believe will be driven primarily by market momentum.
The investment bank believes that an upward trend towards this target will be helped by a year-end rally, catalyzed by Election Day and the start of a long-term easing cycle.
“Our year-end SPX target remains 5,535 led by Momentum, likely helped by a late-year rally catalyzed by Election Day and the start of a long-term easing cycle.”
Currently, the S&P 500 has shown resilience despite some instability, down 0.7% so far this week but up 10.4% so far this year.
While tech stocks, particularly NVIDIA Corporation (NASDAQ ), have further boosted performance, other sectors have lagged, Wells Fargo notes. Without Nvidia's 12% weekly rally, the S&P 500 would have seen bigger declines, especially in mid- and small-cap indices.
Meanwhile, the current first-quarter earnings season provided mixed signals but generally supported a positive outlook, analysts note.
The earnings per share (EPS) rate was typical, although sales were less frequent. Notably, the S&P 500's 5.7% year-over-year aggregate EPS growth beat preseason expectations of 3.4%.
Overall, this reporting season was a more positive catalyst for small caps, the bank said.
!function(f,b,e,v,n,t,s){if(f.fbq)return;n=f.fbq=function(){n.callMethod? n.callMethod.apply(n,arguments):n.queue.push(arguments)};if(!f._fbq)f._fbq=n;n.push=n;n.loaded=!0;n.version=’2.0′;n.queue=();t=b.createElement(e);t.async=!0;t.src=v;s=b.getElementsByTagName(e)(0);s.parentNode.insertBefore(t,s)}(window, document,’script’,’https://connect.facebook.net/en_US/fbevents.js’);
