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Wall Street continues to chase stocks and the US economy higher as earnings and growth emerge.
But Wall Street's biggest bull – John Stoltzfus of Oppenheimer Asset Management – is not only more optimistic about earnings and the Fed's path, but is amazed at how skeptics have been washed out during this year's rally.
“For us, the biggest surprise this year was not so much the resilience of the economy as the significant capitulation among bears and pessimists as well as improved investor sentiment more broadly,” Stoltzfus wrote.
On Monday, Stoltzfus, the firm's chief investment strategist, raised his year-end price target for the S&P 500 to 5,500, a new high on the Street. The S&P 500 closed at 5,218.19 on monday.
This shift “appears to be fueled by the need to invest in the future rather than chasing the latest hot picks or actionable ideas of the day,” Stoltzfus added.
In other words, if there is madness in this market, its avatar will not be Leonardo DiCaprio is found selling stock in a mall on Long Island.
This does not mean that this market is devoid of noise.
Because if there is one catalyst behind the current rally, it is the launch of ChatGPT in November 2022. From a certain point of view, this market is not much different from the rapid financial flows that have fueled market operations since days gone by.
Although as Yahoo Finance's Josh Schiffer notes, the past few weeks of trading have seen the market's rally expand away from AI-centric games and toward sectors more tied to the “real economy,” such as energy, utilities, and housing.
“We are not saying that there aren't some fast players churning out the daily and weekly action or denying that there is some froth in some corners of the market,” Stoltzfus wrote, “but rather that the hot market is stuff and so far appears to have been offset by extending the current rally across Sectors, methods and market value providing compensation for “irrational exuberance”.
While some strategists have discussed the idea of bullish scenarios for stocks that send the benchmark index to the 6,000 level (or higher), Stoltzfus's call is more specific.
Stoltzfus also admits that his bullish outlook, if anything, may not be bullish enough.
Pointing to strong earnings, demographics and the “resilience” of the economy, Stoltzfus wrote: “We may need to raise our price target again later this year if these economic and market forecasts prove that we are too conservative in our forecasts.”
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