Bank of America strategists raise S&P year-end target to 4,600

Bank of America (BAC) strategists, led by Head of Equity and Quantitative Strategy Savita Subramanian, have lifted their S&P 500 (^GSPC) year-end target to 4,600 points. This follows other upward S&P revisions from teams at Societe Generale and Oppenheimer.

Yahoo Finance anchors Brad Smith and Seana Smith report live from the Nasdaq MarketSite to analyze BofA's latest note and how its team is favoring "Magnificent Seven" tech stocks.

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Video transcript

SEANA SMITH: The Bank of America's Savita Subramanian, the latest strategist to boost her year-end outlook for the S&P 500. She now sees the S&P ending the year at 4,600. That's up from her earlier target of 4,300 thanks to higher valuations and also strong macro data. Now, Subramanian's hike here-- S&P year-end hike follows a number of strategists that have done the same thing here-- the team at Soc Gen raising their year end target to 4,750. That was up from 4,300. We also know Oppenheimer's John Stoltzfus did that as well. His is among, I believe, the highest on the street at 4,900 by year-end.

But let's talk a little bit about what we're hearing from Savita and the team at Bank of America because it's a bit of a boost here up about 3% from where she was before at 4,300. So clearly, many of these strategists have been bracing for a recession, the tougher economic environment given the fact that the Fed has been raising rates, will likely be in this higher-for-longer camp for a little bit longer because of sticky inflation, yet the market continues to brush that off.

BRAD SMITH: Yeah, particularly interesting. And I love the title of this, Savita. Kudos to you. You get 25 points on the day. "Don't worry, be happy," the name of this target update from BofA and Savita Subramanian. But particularly, one of the things that actually jumps out to me from this note is saying that everyone still hates stocks except [? Seven. ?] And of course, we were talking about you, the Magnificent Seven, and saying that sentiment is more bearish than bullish, their sell side indicator implies 15% upside over the next 12 months.

S&P 500 consensus growth expectations are almost an all-time low. And X the Magnificent Sevens, 15% expectations. We're looking at some other all-time lows that they note here. One in five funds have under 40% of assets under management in TMT but are 16% underweight the average stock here. So a lot to really digest here. But that one additional kind of nod to the AI play of the Magnificent Seven that we have seen over the course of 2023 here. Speaking of which, the AI hype-- yeah, you know it's real, and we're not talking about Allen Iverson, although we love him.