|
U.S. stocks closed at record highs on Friday as technology
stocks rallied on continued enthusiasm for artificial
intelligence, with further support from declining Treasury
yields.
BofA's revised target reflects its view that risk premium to
equities is likely to be lower as expectation of higher and
"more predictable" earnings have increased this year.
The index's debt having halved since 1980s, lower
earnings-per-share (EPS) volatility, and a shift to asset-light
companies also add to the bullish view, the brokerage said in a
note dated Sunday.
"We see potential for improved margin stability from here as
companies shift from global cost arbitrage and free
capital-driven growth to efficiency/productivity," Savita
Subramanian, BofA's chief U.S. equity strategist, said.
While themes such as AI, weight-loss drugs of GLP-1 category
will continue to drive sentiments, the market would broaden
beyond these, Subramanian said.
Meanwhile, passive inflows could continue to drive momentum in
U.S. mega-cap stocks, she said.
A 5% pullback in the market is seen as likely in 2024, as such
moves have historically have occurred thrice every year, while
10% corrections occur once per year, according to the
strategist.
The market could see a year-end rally, once uncertainty
surrounding the outcome of presidential elections is removed,
she said.
(Reporting by Roshan Abraham in Bengaluru; Editing by Mrigank
Dhaniwala)
[© 2024 Thomson Reuters. All rights
reserved.]
This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content.
|
|
