Wall Street sentiment seems to have changed as CFRA Research upgraded its outlook for S&P 500. This indicates that the rally will continue through 2025.
The firm, led by Chief Investment Strategist Sam Stovall, now projects the S&P 500 to reach 6,850 within 12 months–approximately 9% above where the index stood on Thursday.
This upward revision is a reflection of the growing optimism about U.S. stock market resilience after a nearly 19% correction in early this year.
CFRA has also increased its target for year-end 2020 to 6,525. This represents a gain of 4% from the current level over the next 6 months.
Market resilience and historical patterns
The updated CFRA forecast was based on historical market behaviour.
The firm sent a client note saying, “We’re encouraged by recent recoveries from near-19% and typical post-correction gains of 10% or more since WWII.”
The S&P 500 index reached a new high on Thursday of 6,284.65, a 26% increase from its lows in early April.
After months of volatile market conditions, this is a sign that the momentum has returned.
A seasonality element was also brought up by the firm.
Early October will see the S&P 500 enter its fourth consecutive year, a period which historically has seen gains of an average 13%. This follows what many consider to be a difficult third year.
CFRA is confident that the markets will continue to grow in value until 2026.
CFRA forecasted a conservative level for S&P 500 at year’s end of 5.925, and a 12-month goal of 6.240 as recently as 23 April.
This significant increase in sentiment shows how rapidly Wall Street’s mood can change when economic conditions and policies are altered.
The Fed’s policy and the easing of tariffs add momentum
The softer tone of President Donald Trump’s trade policies has played a major role in the rebound of the stock market.
Investors have been reassured by the rollback of certain tariffs that he had proposed, which has contributed to a broader improvement in the stock market.
The macroeconomic factors that drive the markets remain the most important.
It is important to consider the interaction between Federal Reserve policy and economic growth.
The CFRA did not make a prediction about the Fed’s meeting in July, but the firm does expect the Fed to start easing its monetary policies this year.
The note said: “We expect the Federal Reserve to cut the Fed Funds Rate four times over the next year, for a reduction totaling 1.00%.”
This dovish forecast stands in contrast to short-term market expectations, which were tempered by a stronger-than-anticipated June jobs report that reduced the likelihood of a near-term rate cut.
S&P500 to perform above consensus expectations
According to CNBC’s Market Strategist Survey, CFRA’s target for the year of 6,525 was significantly higher than the projections made by other Wall Street analysts.
This bullish position reflects the view of the firm that macroeconomic developments, historical trends and improved investor sentiment can collectively support the current rally.
The post CFRA raises S&P target after index hits all-time high may change as new updates are made.
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