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Deutsche Bank analysts expect the index to end 2024 at 5,100
points. The S&P 500 is up close to 19% so far this year.
The bank forecast earnings for companies in the benchmark index
to rise 10% after factoring in a "mild short" recession and a
19% increase if U.S. gross domestic product grows by 2%.
Deutsche Bank's 2024-end S&P 500 target is 8.5% higher than the
4,700 median forecast of 33 strategists polled by Reuters.
"If earnings growth continues to recover as we forecast,
valuations will remain well supported around the top of the
range as is typical on the pricing in of a pickup in earnings
growth," the strategists said.
Decline in core inflation to its pre-pandemic levels without
growth having to slow could also support the benchmark index, as
it would suggest the Federal Reserve would not cut rates unless
a recession takes place, they added.
As the effect of higher interest rates roll over, the brokerage
expects a "mild" U.S. recession in the first half of next year,
which it says will prompt the Fed to cut policy rates by 175
basis points. It forecasts the economy to expand by only 0.6%
the year ahead.
Last week, BofA Global Research said it expects the benchmark to
end next year at 5,000 as macro concerns decline and the Fed
puts rate hikes on hold.
(Reporting by Roshan Abraham in Bengaluru; Editing by Rashmi
Aich, Mrigank Dhaniwala and Saumyadeb Chakrabarty)
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