Evercore ISI Predicts S&P 500 to Hit 6,000 by End of 2024 Despite Recent Volatility and Recession Fears
In a recent note to clients, Evercore ISI maintains a positive outlook on the S&P 500, with a base case projection for the index to reach 6,000 by the end of 2024. Despite concerns about market volatility and the possibility of a recession, the firm believes that the economy is still on track for a "soft landing," which would support further growth in equities.
Evercore ISI points to a September rate cut by the Federal Reserve as a likely scenario, citing extreme volatility, recession fears, and slow AI adoption as reasons for the move. While the S&P 500 historically dips around the time of the first rate cut, it typically underperforms its long-term trend in the following 12 months.
The trajectory of equities, according to Evercore, is heavily dependent on the economic outcome. Stocks tend to rise in a soft landing scenario or no landing scenario, but fall if a recession materializes. Currently, there are no significant signs of a recession, as indicated by the U.S. S&P Composite PMI showing ongoing economic expansion and steady earnings estimates with strong EPS growth percentages.
Additionally, Evercore highlights that weekly jobless claims are low and consumer confidence remains stable, suggesting that the economy is resilient. While growth may slow in the second half of 2024, the investment firm advises investors to view any market corrections as buying opportunities rather than deterrents.
Evercore emphasizes that these corrections are part of normal market behavior and should not distract from long-term structural trends, especially with the rise of generative AI (GenAI). Overall, Evercore ISI's base case for the S&P 500 remains bullish, with the index expected to reach 6,000 by year-end, supported by a stable economy and continued earnings growth.
In conclusion, Evercore suggests that even in the event of a Hard Landing recession, the ongoing effects of pandemic stimulus could mitigate its impact and lead to longer-term outperformance, similar to historical trends seen in the 1920s and 1950s following M2 spikes.