Wall Street's Biggest Bull Wishes He Had Been a Bigger Bull - Latest Global News

Wall Street’s Biggest Bull Wishes He Had Been a Bigger Bull

This is the conclusion of today’s Morning Brief, which you can read Log in Delivered to your inbox every morning, along with:

Wall Street’s biggest bull market wishes it had been even more optimistic. But he’s making up for it now.

“It has become clear to us that we underestimated the strength of market momentum,” Brian Belski, chief investment strategist at BMO Capital Markets, wrote in a note Wednesday morning in which he revised his 2024 year-end forecast to a Street high of 5,600.

Buoyed by easing inflation numbers on Wednesday, shares closed at 5,308, putting Belski 5.5% away from his target.

Underestimation is not what Belski is known for. Last November, the strategist’s team hit the high mark for 2024 forecasts at 5,100, making them one of the few that dared to exceed the 5,000 mark.

At that time, the index was at 4,550, more than 5% below its peak of 4,796 in January 2022.

Belksi’s call proved prescient.

And before the calendar flipped, Goldman Sachs, Deutsche Bank and Citi had joined BMO at 5,100, while Oppenheimer and Fundstrat were in pole position at 5,200. And when the S&P 500 beat forecasts for the entire stock market in March, several companies adjusted their forecasts.

This wasn’t the case for BMO, a move that – again – seems prescient given that the index fell as low as 4,967 in April.

“In late February, we decided to draw a line on our 2024 S&P 500 price target of 5,100 as we believed the market had gone a little too far, too fast,” Belski wrote, referring to the rocket-like development of the stock market A development that was well over 20% in just a few months after its low in October.

But this caution was actually a mistake, said the strategist.

The stock market’s decline and recovery to a new all-time high (pick your index, they’re all at peaks) in the three months since has been thanks in large part to a convergence in investor expectations and the Fed’s forecasts for retail sales on Wednesday and the last three months since record CPI remains in the right direction.

“We are comfortable with this because we believe the market behaves similarly to 2021 and 2023 – years in which we did not give enough credit to the strength of market dynamics, which we are trying to avoid this time,” Belski added.

The BMO team found that the first two years of this new bull market underperformed the average performance observed in the first two years of new bull markets. With little change in fundamentals or general economic conditions, the revised forecast is underpinned by sentiment, expectations and the more nebulous aspects of the stock market.

While the new BMO forecast represents a great target for bulls, it comes with a notable warning of potential turbulence.

“We are still skeptical that the 5.5% decline in March and April will be the worst for the S&P 500 this year, as historical data shows an average decline of 9.4% for the second year of bull markets in the Show history,” Belski wrote.

A year-end of 5,600 with a decline of more than 5.5% by then?

This feels almost more bullish than a simple target of 5,600.

Ethan Wolff-Mann is a senior editor at Yahoo Finance and manages newsletters. Follow him on Twitter @ewolffmann.

Morning snapshot

Morning snapshot

Sharing Is Caring:

Leave a Comment