Global Courant 2023-05-30 21:03:52
RBC Capital raised its year-end target for the S&P 500 as the technology-led market rally continues, with double-digit gains for 2023. The Wall Street firm’s head of U.S. equity strategy, Lori Calvasina, raised her S &P 500 forecast for the end of 2023 from 4,100 to 4,250, its previous target dated back to 2022. The new target is only about 1% higher than the S&P 500’s Friday closing price of 4,205.45, but it would be a 10% profit for the year. “We view our target as where the S&P 500 deserves to be at year-end December 31, as opposed to a high-water mark during the year,” Calvasina said in a note. .SPX YTD mountain S&P 500 RBC’s new target is above the average year-end forecast of 4,157 from Wall Street strategists, according to CNBC Pro’s market strategist survey, which rounds up the forecasts of the top 15 strategists. Calvasina said RBC used six different models to set the price target: economic, sentiment, valuation/earnings, political and cross-asset. One reason for the higher target is the new election cycle test, which yields the average S&P 500 return of 16.3% in the third year of a presidential cycle. “We’ve decided to make this move based on some interesting trends we’re seeing in polling and betting market data, which we believe have gone unnoticed due to all the attention on the debt ceiling lately,” Calvasina said. In terms of positioning, RBC believes there is a growing risk that the massive run of large-cap growth stocks is nearing its end. The company said it’s worth looking at cheap small caps now. “We are prepared for Large Cap Growth leadership to pause and selectively add value to sectors like energy,” said Calvasina. “Small Caps represent an attractive entry point for patient investors.” The strategist pointed out that the Russell 2000 is now “deeply undervalued,” with a price-to-earnings ratio of 13.8 times, well below average. In addition, Calvasina said periods of economic stress are usually good buying opportunities for small caps, as the cohort tends to underperform heading into a recession and start to outperform midway through a recession. — CNBC’s Michael Bloom contributed reporting.
RBC raises stock market year-end review, see
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