Base Case for S&P 500 Remains at 6,000 by Year-End: Evercore

Evercore ISI maintains a positive outlook on the stock market, projecting that the index could reach 6,000 by the end of 2024.

In a client update released on Monday, the firm expressed confidence that, despite recent market fluctuations and recession concerns, the economy is poised for a “soft landing,” which would likely encourage further equity growth.

The firm points to the likelihood of a September rate cut by the Federal Reserve being “cemented” due to the current market volatility, recession fears, and slow adoption of artificial intelligence technologies.

Historically, the S&P 500 often experiences a dip following the first rate cut but tends to lag behind its long-term performance in the year following.

Despite this, Evercore highlights that the movement of equities is largely contingent on the overall economic scenario—stocks generally rise during a soft landing or no landing situation, whereas they decline if a recession occurs.

Currently, there are no significant indicators pointing to an impending recession. Evercore notes that the U.S. S&P Composite PMI suggests ongoing economic growth, and that earnings estimates remain strong with robust EPS growth rates.

The firm also emphasizes that weekly jobless claims are low and consumer confidence is stable, further indicating economic resilience.

Although growth may decelerate in the latter half of 2024, the firm advises investors to consider any potential market corrections as buying opportunities. They argue that such corrections are a normal part of market dynamics and shouldn’t distract investors from long-term trends, particularly with the advancing landscape of generative AI.

Overall, Evercore ISI’s outlook for the S&P 500 remains bullish, with expectations for the index to reach 6,000 by the end of the year, buoyed by a steady economy and continuing earnings growth.

Evercore concludes that even in the event of a severe recession, the residual effects of pandemic stimulus could mitigate the downturn, leading to sustained long-term performance, similar to trends observed in previous decades following significant monetary expansions.