Bank of America strategist Stephen Suttmeier sees a major rise within the S&P 500. His estimate places the index at 6,150 factors, representing a rise of 8.5% from Tuesday’s shut.
Sectors Sensitive to Rising Interest Rates
In the previous week, sectors reminiscent of regional banks and small caps have seen beneficial properties. Investors are extra optimistic about doable rate of interest cuts. This month, actual property, financials and shopper discretionary sectors have risen greater than 4%. The Russell 2000 index has risen 10.5% in July, reaching a rise of 11.7% up to now this 12 months.
Best Market Breadth
“Breadth has improved at the index level,” Suttmeier mentioned. The Russell 2000 (IWM), NYSE (NYA) and Dow Jones Industrial Average (INDU) have all hit new highs. This signifies that the summer time 2024 rally is gaining steam.
Bullish Technical Signals
The S&P 500 has reached 5,600 factors, following a bullish cup and deal with chart sample. This sample is taken into account by merchants as a sign for an upward continuation. Suttmeier factors out that the participation within the S&P 500 rally suggests an upside potential to six,150 factors.
Improvement in Moving Averages
The strategist additionally notes that extra S&P 500 shares are buying and selling above their 50-day and 200-day transferring averages. This is a sign of market stabilization and strengthening.
Potential of the iShares Russell 2000 ETF
Suttmeier believes the iShares Russell 2000 ETF, which tracks the small-cap index, may rise as excessive as 260 factors.
This optimistic outlook is predicated on quite a lot of optimistic components, together with improved market breadth and bullish technical alerts. All of this implies doable continued progress within the coming months.
