Wall Street Forecasters Stand by Bullish Calls Amid Trade Tensions
Despite ongoing tariff disputes and persistent inflation concerns, Wall Street analysts remain optimistic about the outlook for US stocks. They cite key differences from the market volatility of 2018 and anticipate strong corporate earnings and economic growth to drive equities higher.
Anchored Inflation Expectations, Artificial Intelligence
Strategists highlight that while inflation has exceeded expectations, price pressures remain anchored, reducing the likelihood of aggressive rate hikes by the Federal Reserve. Additionally, the booming field of artificial intelligence (AI) provides growth potential for related stocks, despite their high valuations.
Positive Impact of Tariffs
While tariffs have sparked concerns over inflation and growth, some analysts suggest they could potentially benefit US companies. This is based on the premise that fair trade measures could expand market access for domestic firms.
S&P 500 Targets and Trajectory
Wall Street forecasts point to an average year-end target of 6,500 for the S&P 500 Index, an all-time high. Strategists at Societe Generale expect it to reach 6,750, driven by corporate profit growth and economic optimism.
Domestic Focus and Volatility
Amidst the tariff uncertainty, analysts recommend considering stocks with significant domestic revenue streams. They argue that such stocks have become relatively undervalued compared to those with international exposure.
Opportunity for Buying
Ongoing trade tensions create an opportunity to purchase stocks that may benefit from domestic demand, such as AbbVie Inc., EQT Corp., and Ventas Inc.
Volatility Persists
However, analysts acknowledge that volatility is likely to remain until there is greater clarity regarding the resolution of trade disputes.