Wall Street Raises Target Prices for US Stocks! But Remember: The Market is More Accurate Than Strategists

According to data collected by MarketWatch, nearly half of the companies among the 20 Wall Street investment banks, brokers, and research firms have raised their forecasts for the S&P 500 index in 2023.

However, the difference between the most optimistic and pessimistic year-end target prices for the S&P 500 index remains unusually high.

According to MarketWatch's calculations, the highest forecast (4900 points) is 44.1% higher than the lowest forecast (3400 points), surpassing the 39.7% difference in mid-June.

Wall Street expects the average target price for the S&P 500 index to be 4360 points by the end of 2023, a 1.9% decrease from Tuesday's closing.

Recent Increase in Target Prices for US Stocks on Wall Street

Savita Subramanian of Bank of America is the latest Wall Street strategist to raise the target for the S&P 500 index. She predicts that by the end of 2023, the S&P 500 index will rise to 4600 points, an increase of approximately 3.5% from Tuesday's closing of 4443 points.

Subramanian believes that the artificial intelligence revolution will help improve productivity in the labor market. She added, "Old economy, inefficient companies can benefit from this theme just like technology and growth, but it is not fully reflected."

According to MarketWatch data, Subramanian's new target is one of the highest on Wall Street, second only to the target prices of Oppenheimer, Fundstrat, Piper Sandler, Credit Suisse, and Société Générale.

Last week, Manish Kabra, the head of US stock strategy at Société Générale, raised the target price for the S&P 500 index, expecting it to reach 4750 points by the end of 2023, compared to the previous target of 4300 points.

Last month, John Stoltzfus, Chief Investment Strategist at Oppenheimer Asset Management, stated that analysts expect the S&P 500 index to surpass its previous high before the end of 2023, raising the year-end target price from 4400 points set in December last year to 4900 points.

According to FactSet data, Oppenheimer's new target price represents a 10.3% increase from Tuesday's closing price.

Mike Wilson, Chief Equity Strategist at Morgan Stanley, and others still believe that the S&P 500 index will fall to 3900 points by the end of this year, which means a 12.2% decrease from Tuesday's closing.**

Market More Accurate Than Strategists

Jeff deGraaf, Director of Technical Research at Renaissance Macro Research, said that although Wall Street analysts have just started adjusting their target expectations for the S&P 500 index, his model shows that the current price is 10% higher than the median expectation.

deGraaf said, "You would rationally think that this is a bad thing because strategists make accurate judgments, so the market must decline."

However, deGraaf stated in early August that according to his model, over the past 20 years, when the trading price of the S&P 500 index is 2% to 12% higher than the median target price of strategists, the "return rate of the market in the past 6 months will be significantly higher than the average level."

"In other words, the market is more accurate than strategists because if strategists were correct - you would say that every time the S&P 500 index is higher than the target price, it would fall back to reach the target price - but that is not the case," deGraaf said.