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2023.09.27 12:45
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Wall Street's Optimism: Will the S&P 500 Index Break Through 5000 Points?

At the industry level, investors expect the information technology sector to have the highest growth in the next 12 months, with an expected increase of 22.8%. Following closely behind is the non-essential consumer goods sector, with an expected growth of 22.7%, and the real estate sector with a growth rate of 22.6%.

Since early August, the US stock market has been declining, with the S&P 500 index falling by 5.5% since early August. However, according to FactSet data, the index has still risen by 13% since the beginning of this year.

It is widely believed that the rise in US bond yields, especially the 10-year and 30-year Treasury yields, is the reason for the stock market sell-off.

Nevertheless, Wall Street analysts predict that the S&P 500 index will rise by 19% in the next 12 months. Here are their top 10 favorite stocks.

Will the S&P 500 Index Break 5000 Points?

Apart from a few soaring tech stocks, the US stock market has been relatively flat in 2023. However, some analysts on Wall Street remain optimistic.

According to analyst John Butters from FactSet, their forecasts for the performance of individual stocks in the next 12 months indicate that the S&P 500 index will rise by 19% from its level on September 21, when the index closed at 4330 points.

To achieve these forecasts, it means that the S&P 500 index must break through 5000 points for the first time.

Butters stated in the report, "The upside target for the S&P 500 index is 5152.11 points, which is 19.0% higher than the closing price of 4330 points on September 21."

At the industry level, investors expect the information technology sector to have the highest increase, with an expected growth rate of 22.8%. This is followed by non-essential consumer goods, with an expected increase of 22.7%, and then real estate, with a growth rate of 22.6%. On the other hand, analysts expect energy stocks to have the smallest increase, with a growth rate of only 10.7%, which is the lowest among the 11 sectors of the S&P 500 index.

The expected performance of the index is based on high earnings growth expectations, which is in sharp contrast to the year-on-year decline in earnings in the past three quarters.

Wall Street analysts predict that Apple's earnings growth rate for 2024 is 12.2%, which saw a slight decline for the first time in over two months last week.

Meanwhile, since June 30, Wall Street's bottom-up earnings expectations for the third quarter of S&P 500 index constituents have decreased by 0.2%, with the overall median expectation dropping from $55.86 to $55.74.

As these forecasts for the S&P 500 index are based on sell-side analysts' overall predictions for individual stocks, Butters is able to list the 10 most optimistic and 10 most pessimistic stocks on Wall Street.

Leaders

  • SolarEdge Technologies, Inc. SEDG (expected gain: 112.8%)
  • Insulet Corporation PODD (75.1%)
  • DexCom, Inc. DXCM (68.4%)
  • FMC Corporation FMC (67.6%)
  • United Airlines Holdings, Inc. UAL (67.1%)
  • Moderna, Inc. MRNA (66.6%)
  • ResMed Inc. RMD (65.4%)
  • Etsy, Inc. ETSY (63.4%)
  • Alaska Air Group, Inc. ALK (62.5%)
  • MGM Resorts International MGM (60.7%)

Laggards

  • Expeditors International of Washington, Inc. EXPD (-5.3%)
  • Tyson Foods, Inc. Class A TSN (-3.9%)
  • Consolidated Edison, Inc. ED (-3.1%)
  • Robert Half Inc. RHI (-2.1%)
  • Amgen Inc. AMGN (-2.0%)
  • Progressive Corporation PGR (-1.7%)
  • International Business Machines Corp. IBM (-1.6%)
  • Aon Plc Class A AON (-0.9%)
  • Seagate Technology Holdings PLC STX (-0.7%)
  • Cboe Global Markets Inc CBOE (-0.2%)