Oppenheimer raises S&P 500 target to 5,500: Here's why

Oppenheimer Asset Management Chief Investment Strategist John Stoltzfus revised his forecast for the S&P 500 (^GSPC), upping the index's year-end target to 5,500. Similarly, Goldman Sachs forecasted the S&P 500 could go as high as 6,000 points in 2024 — or fall back down to 4,500 if Big Tech lags behind Wall Street estimates.

Stoltzfus joins Yahoo Finance Live to talk about the reasoning behind his new price target for the S&P 500 index.

"What backs this upgrade in terms of our target price for the S&P 500 is a number of things, including the Federal Reserve has been very sensitive this fed funds hike cycle if you consider they've raised rates 11 times, paused for six at high levels relative to where we were before. So they've taken the fed funds rate from zero — a band of 0.0 to 0.25% to a band of 5.25% to 5.5% within two years — and have not pushed the economy into a recession," Stoltzfus explains. "It's been good for business if you take a look at the earnings for the S&P 500, third quarter and fourth quarter of last year."

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Luke Carberry Mogan.

Video transcript

[AUDIO LOGO]

- Oppenheimer says that the market still has room to run the team there raising its year end forecast for the S&P 500 to 5,500. Here with that call, Oppenheimer's Chief Investment Strategist John Stoltzfus. John, it's great to have you, again. It feels like not too long ago, we were saying that, hey, your previous target on the street was the bull, one of the most bullish calls on the street. Here we are today upping the target, the year-end target, to 5,500. So lay out that bull case for us. What's going to keep driving the markets to the upside?

JOHN STOLTZFUS: Well, this target is about 8% higher than our 5,200 target, which we put in last December. A lot of people thought we were overly optimistic at that time, and it's just about 5% up from where the market closed on Friday. What backs this upgrade in terms of our target price for the S&P 500 is a number of things, including the Federal Reserve has been very sensitive this Fed funds hike cycle. If you consider, they've raised rates 11 times, paused for 6 at high levels relative to where we were before.

So they've taken the Fed funds rate from 0, a band of 0.0% to 0.25% to a band of 5.25% to 5.5% within two years and have not pushed the economy into a recession. It's been good for business. If you take a look at the earnings for the S&P 500 third quarter and fourth quarter of last year, the fourth quarter earnings season just ended OK. In addition to that, you've seen the consumer in remarkably good shape, even with a slowing of their activity to some extent. And on top of that, when you look at the broad area, you see job postings remain remarkably healthy.

So a thematic of resilience that looks like it will run further. We think near term, any pullback looks to us like an opportunity for investors to look for babies that have been thrown out with the bathwater, looking to the point of we may even have to raise our target again later this year based on this resilience that has really proven to be even stickier than the inflation rate because the Fed has had considerable success bringing the inflation rate lower, though still far from its 2% target.