{"id":89599,"date":"2024-02-03T20:47:51","date_gmt":"2024-02-04T01:47:51","guid":{"rendered":"https:\/\/ifintechworld.com\/?p=89599"},"modified":"2024-02-03T20:47:56","modified_gmt":"2024-02-04T01:47:56","slug":"sp-500-may-rise-10-by-end-of-2024-amid-worries-that-small-cap-stocks-cant-hack-higher-rates-says-bofa","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=89599","title":{"rendered":"S&#038;P 500 may rise 10% by end of 2024 amid worries that small-cap stocks \u2018can\u2019t hack\u2019 higher rates, says BofA"},"content":{"rendered":"<div id=\"js-article__body\" itemprop=\"articleBody\" data-sbid=\"WP-MKTW-0002763551\" role=\"document\">\n<p>U.S. stocks will probably keep climbing next year, with S&amp;P 500 companies in a stronger position to adapt to higher interest rates than smaller ones, according to BofA Global Research.\u00a0\u00a0<\/p>\n<p>BofA is forecasting that the S&amp;P 500 will end 2024 at 5,000, which is up about 10% from the index\u2019s closing level Monday at 4,550.43. The S&amp;P 500<br \/>\n        SPX<span>,<\/span><br \/>\n       which tracks U.S. large-cap stocks, has far stronger gains in 2023 than the small-cap-focused Russell 2000 index.<\/p>\n<div class=\"paywall\">\n<p>\u201cCompanies that can\u2019t hack a higher interest-rate environment,\u201d and are burning through cash, have mostly \u201cdrifted\u201d out of the S&amp;P 500 through price decline, Savita Subramanian, BofA\u2019s head of U.S. equity and quantitative strategy, said Monday during an online media briefing on its 2024 outlook for the U.S. economy and equity market. In her view, the S&amp;P 500 has become a bit higher in quality as a result of such companies migrating lower in market capitalization.<\/p>\n<p>The S&amp;P 500 may keep moving higher in 2024 against the backdrop of a slowing U.S. economy, according to BofA.\u00a0<\/p>\n<p>\u201cWe\u2019re looking for a soft landing,\u201d said Subramanian. Under that scenario, U.S economic growth is\u00a0 \u201cpositive but below-trend,\u201d according to BofA\u2019s outlook report.<\/p>\n<p>Meanwhile, earnings per share for the S&amp;P 500 probably has already \u201ctroughed,\u201d she said. BofA expects that the S&amp;P 500\u2019s EPS may increase next year to $235, the report shows.\u00a0\u00a0<\/p>\n<p>Subramanian said that BofA prefers the equal-weighted version of the S&amp;P 500 to the Russell 2000<br \/>\n        RUT<span>,<\/span><br \/>\n       partly due to concern over higher refinancing risk for the small-cap index. Many companies in the Russell 2000 don\u2019t make money, she said.\u00a0<\/p>\n<p>The market cap-weighted S&amp;P 500 index, whose gains this year have been fueled by a group of seven megacap stocks, has jumped 18.5%  in 2023 through Monday, far exceeding the Russell 2000\u2019s 2.3% gain over the same period, according to FactSet data.\u00a0<\/p>\n<p>Shares of the Invesco S&amp;P 500 Equal Weight ETF<br \/>\n        RSP<span>,<\/span><br \/>\n       which tracks an equal-weight version of the widely followed S&amp;P 500 index, has climbed just 3.8% this year through Monday, FactSet data show.<\/p>\n<p>The U.S. stock market is up this year as investors closely watch the Federal Reserve\u2019s monetary policy, with BofA\u2019s head of U.S. economics Michael Gapen saying during the media briefing that the Fed is now in the \u201chawkish hold camp\u201d with respect to its benchmark rate.<\/p>\n<p>The U.S. central bank has kept its benchmark rate at a target range of 5.25% to 5.5% since July, a 22-year high. That\u2019s after the Fed aggressively raised rates to bring down high inflation.\u00a0<\/p>\n<p>Peak rate and inflation volatility is probably \u201cbehind us,\u201d said Subramanian.\u00a0<\/p>\n<p>Gapen expects the Fed is done hiking rates and may start cutting them in June at a pace of 25 basis points per quarter, although the road to 2% inflation is \u201clikely to be a long one\u201d in absence of a recession, BofA\u2019s outlook report shows.<\/p>\n<\/p><\/div>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.marketwatch.com\/story\/s-p-500-may-rise-10-by-end-of-2024-amid-worries-that-small-cap-stocks-cant-hack-higher-rates-says-bofa-ec160136?mod=markets\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>U.S. stocks will probably keep climbing next year, with S&amp;P 500 companies in a stronger position to adapt to higher interest rates than smaller ones, according to BofA Global Research.\u00a0\u00a0 BofA is forecasting that the S&amp;P 500 will end 2024 at 5,000, which is up about 10% from the index\u2019s closing level Monday at 4,550.43. [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":89600,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-89599","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>S&amp;P 500 may rise 10% by end of 2024 amid worries that small-cap stocks \u2018can\u2019t hack\u2019 higher rates, says BofA | iFintechWorld<\/title>\n<meta name=\"description\" content=\"U.S. stocks will probably keep climbing next year, with S&amp;P 500 companies in a stronger position to adapt to higher interest rates than smaller ones,\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" 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