US Weekly Kickstart
Lifting our 12-month S&P 500 target to 5100 as inflation falls, the Fed turns dovish, and real yields plunge
We raise our year-end 2024 S&P 500 index target to 5100 representing 8% upside from the current level. Decelerating inflation and Fed easing will keep real yields low and support a P/E multiple greater than 19x. Since late October, S&P 500 has surged by 15% and Russell 2000 has soared by 23% as real rates plummeted from 2.5% to 1.7%. Our prior year-end 2024 forecast assumed yields of 2.3% and a P/E of 18x. Upside risk exists to our above-consensus EPS estimate of 5% growth. The improved macro outlook implies a more conducive environment for bringing IPOs to market. Resilient growth and falling rates should benefit stocks with weaker balance sheets, particularly those that are sensitive to economic growth.
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