Summarize in up to four sentences.: S&P 500: BofA's Subaramanian comments on 2024 forecast

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Josh Lipton and Luke Carberry Mogan
Mon, November 27, 2023 at 4:53 p.m. EST
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Bank of America strategists are maintaining their bullish outlook for the S&P 500 (^GSPC) in 2024, raising its year-end point target to 5,000 and average EPS to $235 for the index.

Yahoo Finance's Josh Schafer joins the Live show to discuss Bank of America Strategist Savita Subramanian's comments on the 2024 forecast.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript
- And next year will be a stock picker's paradise. And the S&P 500 will grow to record levels, scoring Bank of America. That equity strategy team expects another strong year with the index reaching 5,000 by the end of 2024. That would be a 10% pop on current levels, and Josh Schafer has been speaking with them about that bullish outlook. Josh.

JOSH SCHAFER: Yeah, Josh. So one thing I was curious, so Bank of America had their roundtable that goes with their 2024 outlook today. And one thing I was curious about going into it is just, the bulls feel a little bit more bullish right now than they were maybe last year if you start thinking about some of these calls out there. Bank of America out calling for 5,000.

We know BMO out this morning saying 51,000. Deutsche Bank saying 51,000 for the S&P 500. We're talking 10% or 11% gains versus last year. Someone like Savita Subramanian at Bank of America, who is traditionally bullish, really only seeing 6% upside in the benchmark, right. So what's the difference? That was my question. Is, all right, you were still relatively positive last year, now we're positive and we're seeing a bigger upside.

And Savita hit on a couple of things when I asked that question that I found interesting. She called it, quote, "Proof of concept." We've seen proof of concept from some of the things we were worried about coming into 2023. Go all the way back to January, we were talking about the year of efficiency, right, in tech. Are these companies going to become more efficient? How are they going to restructure themselves?

You look at a company like Meta, they pass that test, right, for a lot of the street. And that's why you see the Magnificent Seven leading the way they did. They doubled their margins in the previous quarter from where they were last year. They said we can handle this operating environment, and that's made Bank of America more comfortable overall on where we're headed.

Another thing she pointed out that's always interesting too to think about is just, the S&P 500 own restructuring that happens, right, and the companies that leave the S&P 500, some of those weaker parts of the benchmark coming out. You take a look at Dish Network, got kicked out of the S&P 500, that stock's down 70% this year.

It's nice to get some of the bottom out when you, in companies that are considered, whether they're considered an interest rate sensitive or just the market's saying they are, you can look at those year to date performances of three stocks that got booted from the benchmark but they feel like the S&P now is in a better position heading into this year, a little bit more ready for this environment.

- Now, to be clear, these forecasts are frequently wrong, right? But maybe, over the years, I've come to think of them not so much as is the S&P 500 going to finish the year at 5,000 or 5,100, and more as you've framed it like a vibe check, right, of how these strategists are feeling, and there is this cautious optimism, I guess, going into next year. Is that the way to characterize it?

JOSH SCHAFER: I think so. Because the other thing I'm picking up on too is whether you're in the recession camp or not in the recession camp, Bank of America doesn't think we're going to see a recession. But you look at two other notes that we already referenced that were out today with BMO and Deutsche Bank.

Deutsche Bank sees a recession next year. They just basically said, yeah, we've been talking about the recession for a year. So it's priced in. So it's fine. And I think that's an interesting, quote, on quote, "Vibe check" that we're getting on 242s. Maybe the recession does come but it just doesn't feel like when we were talking about the recession last year.

- Well, or if you get the recession accompanied by rate cuts, that also can help with a stock rally maybe.

JOSH SCHAFER: Yeah.

- We'll see.

JOSH SCHAFER: Some would argue.

- Your piece, was it Belski from BMO call it a Chicken Little recession?

JOSH SCHAFER: Yeah.

- Did I see that?

JOSH SCHAFER: Yeah. That's, I mean, that's a top tier quote. Chicken Little recession is great.