U.S. investment bank Morgan Stanley (MS) has raised its year-end 2024 target for the benchmark S&P 500 index to 4,500 and says that stocks should get a boost next year from a rebound in corporate earnings.
The raised outlook represents a 2% increase from where the S&P 500 currently trades. The index, which is comprised of the 500 largest U.S. companies by market capitalization, is at 4,415.24 right now.
Morgan Stanley’s equities research unit is led by well-known Wall Street bear Mike Wilson, who earlier this year apologized for being too pessimistic about stocks.
Wilson now says that he expects a 7% increase in earnings per share (EPS) for S&P 500 companies in 2024, along with 4% to 5% revenue growth and “modest” margin expansion.
However, near-term earnings weakness will continue into early 2024 before a recovery takes hold later in the year, said Wilson in a note to clients.
Wilson sees stronger earnings in 2025 with a 16% jump in profit driven by artificial intelligence (A.I.) led improvements in productivity.
Year-to-date, the S&P 500 index has gained 16% and is up 61% over the last five years.