(Bloomberg) — This year’s furious rally in U.S. stocks is poised to last until the end of 2024, even as the U.S. presidential election appears to be a major wild card, according to the latest Bloomberg Markets Live Pulse survey.
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The S&P 500 index will approach 6,000 by the end of the year – a record 2.3% above Friday’s close – based on the median estimate of 411 survey participants. Three quarters of respondents expect this earnings season to give benchmarks a boost, and the strength of the results of Corporate America which seems more important to the performance of the stock market than the winner of the November vote or even the policy path of the Federal Reserve.
US stocks face a big earnings hurdle this week, with about 20% of S&P 500 members scheduled to release results, including heavyweight Tesla Inc. and IBM Corp. About 70 companies in that size have reported, with 76% announcing earnings that beat estimates. , according to Bloomberg Intelligence data.
After Tesla, another member report called the Magnificent Seven started this month. The tech behemoths — Apple Inc., Microsoft Corp., Alphabet Inc., Amazon.com Inc., Nvidia Corp. and Meta Platforms Inc. – has led to an increase in equity since last year. But they trailed last quarter as the Fed cut interest rates for the first time since 2020, supporting sectors like financials and utilities.
Survey takers expect the tech giant to lead again. A combined 75% expect the Magnificent Seven to beat or perform in line with the rest of the market this quarter, after the group began October with a 0.9% decline. One reason investors remain bullish is that most of the S&P 500’s earnings still come from the Magnificent Seven.
“The catch-up in the Magnificent Seven after the lackluster period is a compelling trade to look at now,” said Anastasia Amoroso, chief investment strategist at iCapital.
The median survey respondents saw the S&P 500 ending the year at 5,977, up from Friday’s close of 5,865. That would surpass the index’s 23% rise in 2024, which has been 47 record highs, including the past two weeks.
The S&P 500’s historical median return from mid-October to Dec. 31 was about 5%, according to data from Goldman Sachs Group Inc.’s trading desk. back to 1928. It was even higher in an election year, about 7%.
Earnings First
Optimism about US equity from survey-takers comes as the race between Vice President Kamala Harris and former President Donald Trump will go down to the wire, with polls showing the candidates are generally neck and neck.
There has been chatter lately about the supposed revival in trading that is expected to benefit from the victory by Trump, the Republican candidate, including in Bitcoin and shares of Trump Media & Technology Group Corp. However, the largest chunk of respondents – 45% – said the strength of the most important earnings for the business portfolio, compared with 39% pointing to the election results and 16% to the magnitude of Fed easing.
“I know the election brings a lot of emotions depending on whether one candidate wins or not, but don’t come to the portfolio,” said Brian Spinelli, co-chief investment officer at wealth advisory firm Halbert Hargrove.
One event tech stock watchers will be watching is Nvidia’s earnings, which will be released in November. The company’s latest report sent the chip maker’s shares lower in the following days. This time, the largest group of survey respondents, 45%, saw the results pushing stocks. Nvidia has been the poster child for the boom in AI technology, with its stock nearly tripling this year.
While polls show plenty of enthusiasm for tech, there’s another area anticipated to lead the S&P 500 this quarter: financials.
Read More Banks Post Strong Earnings, Pushing Stocks Above 2023 Level
The results are so far. The sector rose 5% in October, the most among 11 S&P 500 groups, boosted by strong earnings from Wall Street. Bank stocks tend to do well when the Fed cuts rates, which boosts lending and other economic activity.
The Pulse MLIV survey was conducted from October 14-18 between Bloomberg News terminals and online viewers worldwide who chose to participate in the survey, and included portfolio managers, economists and retail investors. This week, we ask how the US election will affect your wallet. Share your views here.
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