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S&P 500: Mid-Year Prospects Analysis

As shown by the daily chart of the S&P 500 (US SPX 500 mini on FXOpen):

→ Since the beginning of 2023, the price has been moving in an upward blue channel. To date, the increase has been over 42%;

→ Since the start of 2024, the price has formed a steeper upward channel (shown in orange). In the first half of the year, the growth has exceeded 14%.

How realistic is it for bullish sentiment to persist? And what might the index quotations be by the end of 2024?

Yahoo Finance reports a decidedly bearish outlook for the S&P 500 (US SPX 500 mini on FXOpen) at the end of 2024, held by Marko Kolanovic, the chief strategist at JPMorgan Chase & Co. He cites the following factors:

→ Economic slowdown;

→ Downward revision of company profits;

→ The Federal Reserve may cut interest rates less than the market expects, which would put additional pressure on the economy and stock prices in the second half of the year.

Kolanovic predicts the S&P 500 (US SPX 500 mini on FXOpen) will be at 4200 points by the end of 2024. In the context of the attached chart, this implies not only a bearish breakout of the lower boundary of the blue upward channel but also a decline to the year’s minimum.

On the other hand, strategists and analysts from other reputable financial institutions tracked by Yahoo Finance hold a more optimistic view:

→ Evercore ISI analysts predict the S&P 500 (US SPX 500 mini on FXOpen) will reach 6000 points by the end of 2024. This means the price will remain within the blue channel.

→ The average estimate from analysts points to a target of 5300.

Based on these estimates, the lower boundary of the upward orange channel, which has been in place since the start of the year, will likely be broken, potentially leading to a significant correction.

In addition to traditional fundamental factors (such as inflation, the Federal Reserve’s interest rate, the labour market, and company profits), the S&P 500 (US SPX 500 mini on FXOpen) price in the second half of the year could be influenced by:

→ The presidential election in November;

→ The unusually high weight of the top 10 leading technology companies (including Nvidia, Microsoft, and Google) in the index.

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