Base case remains for S&P 500 at 6,000 by year-end: Evercore By Investing.com

Evercore ISI remains bullish on , maintaining its base case for the index to reach 6,000 by the end of 2024.

In a note to clients on Monday, the firm said that despite recent market volatility and recession fears, it believes the economy is still on track for a “soft landing,” which would support continued gains in stocks.

Evercore ISI notes that a September rate cut by the Federal Reserve is now “cemented” due to “extreme volatility, recession fears and slow adoption of AI (artificial intelligence).”

Historically, the S&P 500 tends to fall around the first interest rate cut, but typically underperforms its long-term trend over the next 12 months.

However, Evercore says the stock’s trajectory is highly dependent on the economic outcome — stocks tend to rise in a weak or no-landing scenario and fall if a recession materializes.

Currently, Evercore ISI sees no material signs of recession. The company notes that the US S&P Composite PMI points to continued economic expansion and earnings estimates remain flat with strong EPS growth.

In addition, Evercore points out that weekly jobless claims are down and consumer confidence is stable, suggesting the economy remains resilient.

While acknowledging that growth could slow in the second half of 2024, the investment firm stresses that any market corrections, or “air pockets”, should be seen as buying opportunities.

They explain that these corrections are seen as part of normal market behavior and should not deter investors from long-term structural trends, especially given the expanding scope of generative AI (GenAI).

Overall, Evercore ISI’s baseline scenario for the S&P 500 remains bullish, with the index expected to reach 6,000 by the end of the year, supported by a stable economy and continued earnings growth.

“Even in the midst of a Hard Landing recession, the continued effects of the pandemic stimulus could dampen its impact and support long-term performance, as seen in the decades following M2’s previous peaks in the 1920s and 1950s,” Evercore concludes .