The S&P 500 Index could rally close to an additional 10% this year, if past market manias are any guide, according to Stifel, Nicolaus & Co. But like prior "bubble" episodes, this one eventually has to pop too, the firm's chief equity strategist says.
Stifel's Barry Bannister says the U.S. stock benchmark has a shot at reaching the 6,000 mark before the end of 2024 as investors keep piling in, up from just below 5,500 Thursday.
But by mid-2026, he expects the gauge to sink back to where it began this year — around the 4,800 level — erasing a fifth of its value.
To be clear, the forecaster says risk assets, and equity markets in particular, are due for a correction much sooner. His official year-end S&P 500 target stands at 4,750, implying a drop of some 13% from today.
But the euphoria among investors is set to propel shares higher before they eventually plunge, he says.
"Timing is everything," Bannister and his team wrote Wednesday in a note to clients, "and we are aware that investors may be in full-fledged bubble/mania mode which looks past our concerns."
State of the Equity Markets
U.S. stocks have extended their bull run as investors expect signs of cooling inflation will lead the Federal Reserve to reduce interest rates this year.
That view, coupled with strong earnings and fervor for companies linked to artificial intelligence, have powered the S&P 500 to a gain of almost 15% this year.
