sp500_forecast

Three Major US Banks Predict the Future of the S&P 500

Three of the biggest banks in the US are revealing their forecasts for the S&P 500 after the stock market index experienced a major sell-off at the beginning of the year.

JPMorgan Chase’s Analysis

According to analysts at JPMorgan Chase, the largest US bank, tariff-related headlines are unlikely to be the main cause of the recent market correction, reports FOX Business.

A team led by Nikolaos Panigritzoglou states that the $5.5 trillion S&P 500 correction was most likely driven by two types of investment firms adjusting their positions rather than investor fears of a potential recession.

“In our mind, the most likely culprits are equity hedge funds and in particular two categories: equity quant hedge funds and equity TMT sector hedge funds.”

Quant hedge funds typically use data and code to make investment decisions, while TMT sector hedge funds primarily invest in firms related to technology, media, and telecommunications.

JPMorgan suggests that the S&P 500 may be close to forming a local bottom.

“And if US equity ETFs (exchange-traded funds) continue to see mostly inflows as they have thus far, there is a good chance that most of the current US equity market correction is behind us.”

Bank of America’s Outlook

Meanwhile, Bank of America (BofA) believes that the S&P 500 has further downside potential before stabilizing.

“Sentiment/positioning/price signal equity correction not quite over; we say buy SPX at 5,300 once BofA FMS (fund manager survey) cash surges above 4%, HY (high-yield) spreads approach 400 basis points, equity outflows accelerate.”

Morgan Stanley’s Perspective

According to Morgan Stanley, the financial services giant, the S&P 500 is now at a level where tactical rallies could emerge.

“We stand by our call from last week that 5,500 should provide support for a tradable rally led by cyclicals, lower quality, and expensive growth stocks that have been hit the hardest and where the short base is the greatest.”

Previous Predictions

Late last year, all three banks predicted that the S&P 500 would reach even greater heights in 2024. BofA estimated the index could climb to 6,666, while both JPMorgan and Morgan Stanley suggested the stock market could surge to 6,500.

At the time of writing, the S&P 500 is trading at 5,662 points.

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