The stock market projections for 2024 continue to rise, with Wells Fargo head of equity strategy Christopher Harvey recently increasing his year-end target for the S&P 500 to 5,535. This marks a new high among strategists, reflecting a 6% upside from the benchmark average's opening on Monday.
Harvey's bullish outlook is driven by investors looking past concerns about high stock valuations and focusing on longer-term growth and discounting metrics. He believes that the bull market, AI's secular growth story, and index concentration have shifted investors' attention away from traditional relative valuation measures.
Despite the market's strong performance in 2024 so far, Harvey acknowledges that the next leg higher for the S&P 500 may not come as swiftly. Recent market fluctuations, including a rise in the 10-year Treasury yield and an increase in the CBOE volatility index, suggest potential volatility ahead.
Harvey notes that there are key risks to his projections, including a resurgence in inflation or elevated bond yields. However, with the 10-year Treasury yield currently below his threshold of concern at 4.43%, the outlook remains relatively positive.
Overall, Harvey anticipates a potential volatility spike in the first half of 2024, followed by a “melt-up” in the second half driven by political outcomes and an easing cycle. While uncertainties remain, his updated projections reflect the ongoing optimism in the stock market as investors navigate the evolving economic landscape.