Deutsche Bank strategists said that given rising stock buybacks, strong corporate earnings and robust inflows, they decided to raise their forecast for the S&P 500 index by 250 points at the end of 2024, to 5,750 points, which represents an increase of about 2.8% from the current level.
Strategists believe that S&P 500 earnings growth continues to run robustly in the low double digits, in line with typical growth rates outside of recessions.
"The recent stock market crash due to fears of a weakening labor market and de-rating of technology stocks seems to have come to an end, and positioning has declined in line with revenue growth. Concerns about the cooling of the labor market were dispelled as employment growth stabilized in August on a year-to-date basis," Deutsche Bank said, adding that, according to their forecasts, the volume of share buybacks will grow to about $1.2 trillion in 2025 from the current $1 trillion.
Equity inflows have been strong over the past four months, which raises prospective corporate earnings and equity returns, strategists said.