(Bloomberg) — The S&P 500 ( ^GSPC ) will extend its record-setting rally to 7,100 by the end of next year amid a strong economy, according to Oppenheimer Asset Management, whose outlook is now the most bullish among peers.
Fundamentals “suggest the current resilience of the economy and the stock market appear poised to continue into next year,” the firm’s Chief Investment Strategist John Stoltzfus wrote in a note.
The broadening of the rally to various sectors, market capitalizations and styles suggests “the current bull market likely has legs strong enough to climb the proverbial ‘wall of worry’ into and through 2025,” he said. His new target implies upside of about 17% from the latest close, making it the most optimistic among strategy teams tracked by Bloomberg.
The S&P 500 has advanced about 28% so far this year, its best showing since 2019. Solid economic growth, an interest rate-cutting cycle, improving earnings and optimism about artificial intelligence have fueled the gains.
Wall Street strategists are mostly expecting the rally to continue next year, with forecasts from the likes of Morgan Stanley, Goldman Sachs Group Inc. ( GS ) and JPMorgan Chase & Co. ( JPM ) expecting upside of about 7%. But Stoltzfus joins a few including Wells Fargo & Co's ( WFC ) Christopher Harvey in seeing the S&P 500 rising above 7,000 for the first time ever by the end of next year.
The Oppenheimer strategist was already among the most optimistic on the US benchmark this year, lifting his 2024 target to 6,200 in November. The gauge closed at 6,090 on Friday.
Stoltzfus expects artificial intelligence developments to provide a big boost to the equity market, calling it a “watershed point” for technology and economic progress.
“We’re not suggesting paradise on earth nor are we expecting a ‘Goldilocks world’ but rather a genuine potential for AI to provide greater efficiencies in key areas that are challenging progress today across the sectors and society,” he said. “Companies in all eleven sectors could benefit from improved productivity via AI to further serve the needs of business and customers”
