sp500_forecast
Three of the Biggest US Banks Predict the Future of the S&P 500
Three of the biggest banks in the US are revealing their forecasts for the S&P 500 after the stock market index experienced a major sell-off at the start of the year.
JPMorgan Chase’s Analysis
According to analysts at JPMorgan Chase, the largest US bank, tariff-related headlines are not the primary catalyst behind the recent market-wide correction, reports FOX Business.
A team led by Nikolaos Panigritzoglou suggests that the $5.5 trillion S&P 500 correction was likely driven by two types of investment firms adjusting their positions rather than investor concerns about a potential recession.
“In our mind, the most likely culprits are equity hedge funds and in particular two categories: equity quant hedge funds and equity TMT sector hedge funds.”
Quant hedge funds typically use data and code to make investment decisions, while TMT sector hedge funds primarily invest in firms related to technology, media, and telecommunications.
JPMorgan believes that the S&P 500 may be approaching a local bottom.
“And if US equity ETFs (exchange-traded funds) continue to see mostly inflows as they have thus far, there is a good chance that most of the current US equity market correction is behind us.”
Bank of America’s Forecast
Meanwhile, Bank of America (BofA) suggests that the S&P 500 has further downside potential before finding a price floor.
“Sentiment/positioning/price signal equity correction not quite over; we say buy SPX at 5,300 once BofA FMS (fund manager survey) cash surges above 4%, HY (high-yield) spreads approach 400 basis points, equity outflows accelerate.”
Morgan Stanley’s Perspective
According to Morgan Stanley, the financial services giant believes that the S&P 500 is hovering at a level where it could trigger tactical rallies.
“We stand by our call from last week that 5,500 should provide support for a tradable rally led by cyclicals, lower quality, and expensive growth stocks that have been hit the hardest and where the short base is the greatest.”
Late last year, all three banks predicted that the S&P 500 would reach even greater heights in 2024. BofA expected the index to climb to 6,666, while both JPMorgan and Morgan Stanley projected a surge to 6,500.
At the time of writing, the S&P 500 is trading at 5,662 points.
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