Bank of America: Forecast for the S&P 500 Index for 2024-2026

Bank of America analysts have made an optimistic forecast regarding the S&P 500 index for the coming years. According to their forecast, by 2024, the index could reach 5,000 points, representing a 36% increase compared to the current level.

Experts base their forecast on the analysis of long-term market cycles. They have noticed a similar pattern in the index dynamics between the current state of the stock market and the period observed in the 1950s and 1980s. The 24% growth of the S&P 500 index from October 2022 (when it reached its lowest point) to the present day confirms this trend.

On the other hand, experts do not rule out the possibility of the index continuing to rise even after 2026. They point to the presidential cycle, which shows a correlation between the stock market and the four-year term of the US presidency. Historical data on the influence of presidential terms on the stock market suggests that the third presidential term is a strong period for the stock market, including the fourth year of presidency, which also demonstrates positive dynamics.

However, not all analysts and experts agree with Bank of America’s optimistic forecast. Jeremy Grantham, the founder of GMO investment fund, holds a different opinion and believes that a stock market crash could occur in the coming years in the US. He assesses the probability of such a scenario at 70%.

Thus, Bank of America’s forecast presents an optimistic outlook for the S&P 500 index. However, it is important to consider potential risks and forecasts from other experts in order to form a more complete picture of the market’s future development.

Forecast for the S&P 500 index in 2024-2026 by Bank of America analysts

YearS&P 500 index level (forecast)
2023 (as of July 6, 2023)4411.6

Factors expected to contribute to the growth of the S&P 500 index, based on the provided information, can be grouped as follows:

  • Long-term bull market: Bank of America analysts compare the current growth dynamics of the S&P 500 index to the situations in the 1950s and 1980s, suggesting that the growth may continue. This factor is considered significant and implies sustained index growth in the future.
  • Presidential cycle: Historical data shows a correlation between stock market performance and the four-year presidential term in the United States. The second half and third year of the presidential term are usually considered strong periods for the stock market, which may positively impact the growth of the S&P 500 index.
  • Growth potential: Analyst forecasts indicate potential growth for the S&P 500 index in the coming years. It is projected to exceed the 6000 level by 2026, which represents a potential growth of approximately 36% over a three-year horizon.

Risks to consider:

  • Possibility of a market crash: However, some experts, such as Jeremy Grantham, believe that a stock market crash in the United States may occur in the near future. The expert estimates the probability of such an event at 70%, indicating a very high risk.

Thus, based on the provided information, factors expected to contribute to the growth of the S&P 500 index include a long-term bull market, the presidential cycle, and historical data. Among the risks, experts highlight the possibility of a market crash in the near term. However, it is important to note that market forecasts and predictions always involve elements of uncertainty and risk.

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