Wells Fargo analysts on Friday reaffirmed their year-end target of 5535, which they believe will be driven primarily by market momentum.
The investment bank believes the uptrend toward this target will be aided by a year-end rally, catalyzed by Election Day and the start of a long-term easing cycle.
“Our year-end SPX target remains 5535, led by Momentum, likely aided by the year-end rally catalyzed by Election Day and the start of a longer-term easing cycle.”
The S&P 500 has shown resilience so far despite some volatility, down 0.7% for the week but up 10.4% year to date.
While technology stocks, especially NVIDIA Corporation (NASDAQ:), have further strengthened their performance, other sectors are lagging, Wells Fargo said. If not for Nvidia’s 12% weekly rally, the S&P 500 would have seen more declines, especially in the mid- and small-cap indexes.
Meanwhile, the ongoing first-quarter earnings season provided mixed signals but generally supported a positive outlook, analysts said.
Declines in earnings per share (EPS) were typical, although sales fluctuations were less frequent. Specifically, the S&P 500’s annualized EPS growth of 5.7% beat preseason expectations of 3.4%.
Overall, this reporting season has become a more positive catalyst for small-cap companies, the bank notes.