S&P 500 to hit new highs above 5,700: BTIG By Investing.com

Investing.com — Analysts at BTIG predicted in a note on Friday that it will hit new record highs, potentially breaking above 5700 in the next week or two.

Analysts cite the chances of a Federal Reserve rate cut at the upcoming Federal Open Market Committee (FOMC) meeting as a key factor behind this upbeat outlook.

“The biggest news in the last 24 hours has been the change in rates for a 50bps cut,” BTIG said, noting that just 24 hours ago, the probability was around 15%. This probability has now increased to 45-50%.

That shift has already supported market activity, particularly in small-cap stocks, which rose about 1% before the market.

BTIG also pointed to gold prices, now at new highs, and silver up 70 basis points. They reiterated their view that ETFs like IWM, XOP, GDX (NYSE: ) and SLV are poised for further gains.

The S&P 500 is currently about 1% away from an all-time high. BTIG noted the parallels with the Fed’s rate cut cycle in 2007, when the market rebounded from a significant decline and made a marginal new high before entering a decline.

However, the firm highlighted differences in the current market, particularly with credit spreads remaining stable.

“This time spreads widened a bit in August, but have been steady in recent weeks around 130bps.”

While BTIG sees a move above 5700 as imminent, they caution that after the FOMC meeting, investors should assess the risk/reward balance as a potential “sell the news” scenario could emerge. In the short term, analysts favor small-cap stocks over mega-cap tech, expecting better performance in the sector.