Stocks Could Gain Another 13% This Year, Says Prominent Bull

Introduction

Stocks closed lower on Wednesday, marking a third-straight session of losses for the S&P 500 (^GSPC) and underscoring the seasonal trend of market declines in September. But one of Wall Street’s most prominent bulls thinks the S&P could gain another 13% this year.

Potential for Future Gains

BMO Capital Markets Chief Investment Strategist Brian Belski wrote on Tuesday night that he believes higher US stock prices through year-end is the path of least resistance. He notes that historically, stocks have produced gains 71.4% of the time in the six months following a 20% run-up like the S&P 500 saw to start 2023. This suggests that September seasonality may not be at play.

Other market experts also share this sentiment. Carson Group chief market strategist Ryan Detrick told Yahoo Finance that when stocks are up more than 10% year-to-date, September seasonality usually isn’t as bad. Fundstrat head of research Tom Lee recently called for a gain in the benchmark average this September.

Contrary to Doom and Gloom Predictions

Despite concerns over inflation and potential monetary tightening, Belski and other street bulls argue that the recession many predicted in 2023 hasn’t happened yet. Job openings and participation are back to pre-pandemic levels, fueling resilience in consumer spending. Inflation has also decreased faster than expected, even with a recent uptick.

JPMorgan’s chief markets strategist Marko Kolanovic warns of risks such as an interest rate shock, but Belski’s team at BMO shows that rates don’t necessarily mean doom for stocks. Historical data indicates that the S&P 500 has gained when the 10-year Treasury Yield was below its 3-year moving average.

Improving Earnings Growth

Earnings projections, seen as a key driver of stock prices, are rising. Recent data shows that earnings estimates for the remainder of 2023 and 2024 full-year forecasts were revised up during July and August. This bodes well for future company earnings and stock prices.

Belski concludes that the recent uptick in earnings revisions is likely to translate into improved earnings growth in the coming months.

Conclusion

Despite recent losses, there is optimism among some market experts that stocks could gain another 13% this year. Historical trends, positive economic indicators, and improving earnings growth are cited as reasons for this bullish outlook.

Disclaimer: This article is for informational purposes only and should not be considered as investment advice. The author and Yahoo Finance are not liable for any losses or damages resulting from the use of this information.