In a surprising Wall Street Sentiment shift from his previous bearish stance, Julian Emanuel, Evercore ISI’s chief equity and quantitative strategist, has significantly raised his forecast for the S&P 500 Index. Emanuel now projects the S&P 500 to reach 6,000 by the end of 2024, marking a notable about-face from his earlier prediction of 4,750.
This new target represents a 10% increase from the index’s closing level last Friday and positions Emanuel’s forecast as the most bullish among major equity strategists tracked by Bloomberg. Emanuel’s optimism stems from a resilient economy, improving corporate earnings, and the anticipated end of the Federal Reserve’s tightening cycle, which has already driven the S&P 500 up 14% this year. He believes that waning inflation and excitement surrounding artificial intelligence (AI) will further propel stock prices.
The AI Impact and Economic Resilience
Emanuel credits the pandemic for fundamentally changing economic dynamics. In a note to clients, he emphasized how record stimulus, elevated cash balances, and low leverage have fortified consumer strength. However, it is the advent of generative AI that Emanuel sees as a transformative force across all sectors. “The potential of GenAI in every job and sector is inflecting,” he wrote, highlighting AI’s growing influence on the market. With a backdrop of slowing inflation and a Federal Reserve poised to cut rates, Emanuel envisions a “Goldilocks” scenario—one that is just right for sustained growth.
He has also revised his earnings per share (EPS) estimates for the S&P 500, predicting $238 for 2024 and $251 for 2025, suggesting an 8% and 5% profit growth, respectively. If these earnings projections hold, they would push the S&P 500’s price-to-earnings (P/E) multiple to 25 on a trailing basis by year-end, still below the dot-com peak level of 28.
Market Valuations and Broader Wall Street Sentiment
Despite concerns over elevated valuations, Emanuel argues that the S&P 500’s P/E multiples could remain high for an extended period, driven by the AI-driven market exuberance. His forecast comes in the wake of a similar upgrade from Goldman Sachs’ David Kostin, who also increased his year-end target for the S&P 500, reflecting broader Wall Street Sentiment optimism about earnings growth and the U.S. economy. Notably, other strategists like UBS’s Jonathan Golub and BMO Capital Markets’ Brian Belski have set slightly lower targets of 5,600, underscoring a generally positive outlook. Contrarily, JPMorgan Chase & Co. remains cautious, with the lowest year-end target of 4,200, implying a potential decline of over 20% from current levels.
Emanuel’s projection of the S&P 500 hitting 6,000 by December is based on his belief in sustained economic resilience and transformative technological advancements. Looking further ahead, he even sees the possibility of the index reaching 7,000 by the end of 2025, reflecting his bullish long-term view on the market. This strategic shift from one of Wall Street’s former bears signifies a growing confidence in the market’s potential to achieve unprecedented heights driven by innovation and strong economic fundamentals.
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