The Tell: S&P 500 may rise to 5,100 by end of 2024 as U.S. stock-market rally broadens, Citi says

The S&P 500 index may climb to 5,100 by the end of next year in a broadening of the U.S. stock market’s rally, according to equity analysts at Citigroup. 

Citi’s price target for the end of 2024 is premised on its estimate that the S&P 500’s earnings per share will increase to $245, equity analysts led by Scott Chronert said in a research note Friday. They lowered their midyear 2024 target to 4,800 from 5,000.

The U.S. stock market has rallied during the fourth quarter, with the S&P 500 closing Friday at about 4,604, according to FactSet data. The index has climbed almost 20% this year against the backdrop of a resilient economy, despite the Federal Reserve’s tightening of monetary policy to bring down inflation. 

“All told, we are positive on U.S. equities premised on improving earnings growth, even as recession risk lingers,” the Citi Research analysts said. “We expect a broadening beyond 2023’s Mega Cap Growth leadership accompanied by index earnings growth acceleration influenced by positive contributions across sectors and a greater number of individual stocks.” 

Read: Would a 2024 recession be ‘dire’ for stocks? Why Citi expects S&P 500 earnings to climb next year.

Citi analysts lowered their midyear 2024 target for the S&P 500 to 4,800 in part to allow for a slowing economy in the first half of next year, according to the note. Their year-end target for 2024 “presumes recession resolution, Fed policy evolution, above-consensus earnings growth, with a multiple not far off of current levels.”

The S&P 500 has a current price-to-earnings ratio of 20.7, the note shows. 

Wall Street’s predictions for where the S&P 500 will wind up at the end of 2024 have varied widely, with market strategists divided as to whether the index will finish next year above or below 5,000, according to a report Friday from FactSet senior earnings analyst John Butters.

“On December 7, the bottom-up target price for the S&P 500 was 5,068.41, which was 10.5% above the closing price of 4,585.59,” Butters wrote in the report.

Read: S&P 500 may rise 10% by end of 2024 amid worries that small-cap stocks ‘can’t hack’ higher rates, says BofA

Meanwhile, the U.S. stock market closed higher on Friday as investors weighed an employment report showing job growth in November that was slightly stronger than expected. The S&P 500
SPX,
Dow Jones Industrial Average
DJIA
and Nasdaq Composite
COMP
each rose 0.4%.

The S&P 500 logged a weekly gain of 0.2%, rising for a sixth straight week in its longest such winning streak since the stretch ending Nov. 15, 2019, according to Dow Jones Market Data.

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