The Unstoppable Bull: S&P 500 Soars Thanks to AI and Robust US Economy

The bull market of the S&P 500 is in an unrestrained upward trend, fueled by the euphoria surrounding artificial intelligence and a surprisingly stable US economy. Over the past two years, the index has recorded an impressive growth of over 60 percent and is approaching a historic high. Experts from renowned Wall Street firms see no reason why this upswing should end soon. It is expected that further profit growth and a solid economic environment could support the rise, especially as the Federal Reserve lowers interest rates. In June 2023, a bull market was officially declared when the S&P 500 had risen by 20 percent. Historical data from Carson Group suggests that this market cycle still has much potential, as its duration of two years is well below the average of 5.5 years. Several strategists forecast continued growth for the benchmark index both by the end of the year and through 2025. Brian Belski of BMO Capital Markets recently raised his year-end target for the index to a peak of 6,100 points. Goldman Sachs also increased its target to 6,000 points and for the 12-month horizon to 6,300 points, although their chief strategist David Kostin warns of potential constraints due to already high valuations. These high valuations have made some market participants skeptical, but analysts like Kevin Gordon of Charles Schwab urge not to rely solely on them to predict the end of a bull market. Michael Kantrowitz of Piper Sandler also emphasizes that significant market downturns usually require external shocks, such as a sudden rise in interest rates or unemployment. Both factors are currently rather unlikely. Scott Chronert of Citi highlights that a sentimental consensus on a soft landing could be important driving forces. The expensive price level is interpreted by experts as a sign of a shift from a macroeconomic to a fundamentally driven market. For further growth, corporate profits must be at the forefront, with growth of about 10 percent expected for 2024 and nearly 15 percent for 2025. Additionally, artificial intelligence could continue to play a central role. Chronert is optimistic that the AI narrative will further manifest in the market, now with an increased focus on companies that benefit from the technology beyond just manufacturing AI chips, thereby improving profit margins.