The S & P 500 could surpass 5,600 if cooling inflation leads to rate cuts, according to UBS. Strategist Jonathan Golub said that even his target, which was set in late May, could get left behind on a market rally this year. And if that target is just met and not exceeded, that’d still mean the benchmark index will rise another 3.3% from where it finished Wednesday’s session – and push further into record-high territory. The original hike to 5,600 was due to “improving earnings and shrinking tail risks,” Golub wrote to clients. Now, “falling inflation and declining rates (as UBS economists predict) provide the potential for even greater upside.” .SPX YTD mountain .SPX YTD While the number of anticipated interest rate cuts in 2024 has jumped around, three to four are now expected over the next 12 months, Golub noted. That’s up from the forecast of fewer than two seen at the end of April, and can signal growing expectations for easing monetary policy in the future. He also noted that Treasury yields keep retreating, while earnings forecasts and general financial conditions continue improving. Golub’s 5,600 estimate leaves him tied with BMO’s Brian Belski as the most bullish market strategist on Wall Street, according to CNBC Pro’s survey. If Golub officially raises it above that, he would stand alone with the highest target. (For comparison, the average analyst anticipates the S & P 500 closing the year at 5,220.) That marks a major turn from where Golub started 2024. He initially expected the S & P 500 to finish the year at 4,850, which is approximately 15% lower than his current estimate. The benchmark index has climbed about 14% since the year began.
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