Wall Street’s most bullish strategist cites a ‘big surprise’ pushing stocks higher: Morning Brief

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Wall Street continues to chase stocks and the US economy higher as profits and growth impress.

But Wall Street’s biggest bull — John Stoltzfus at Oppenheimer Asset Management — isn’t just more optimistic about earnings and the Fed’s path, but surprised at how skeptics have been washed out during this year’s rally.

“For us the big surprise this year has not been so much the resilience of the economy but rather the substantial capitulation among the bears and bearish community as well as improved broader investor sentiment,” 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 Street high. The S&P 500 closed at 5,218.19 on Monday.

Stoltzfus added that this shift “appears to be supported by needs to invest for the future rather than chase the latest hot pick or actionable idea of the day.”

In other words, if there’s a frenzy in this market its avatar won’t be found in Leonardo DiCaprio pitching stocks in a strip mall on Long Island.

Not to say this market is free of hype.

Because if there’s a single catalyst behind the current bull run it was the launch of ChatGPT in November 2022. Seen a certain way, then, this market isn’t so different from the fast money flows that have fueled market runs from days gone by.

Though as Yahoo Finance’s Josh Schafer has chronicled, the last several weeks of trading have featured a broadening of the market rally away from AI-centric plays and towards sectors more levered to the “real economy,” like energy, utilities, and housing.

“We’re not saying that there’s not some fast players on the move in the day to day and week to week action or deny that some froth exists in some corners of the market,” Stoltzfus wrote, “but rather that the hot market stuff thus far looks to have been offset by a broadening of the current rally across sectors, styles, and market capitalizations providing offset to ‘irrational exuberance.’”

And while some strategists have discussed the idea of upside scenarios for stocks sending the benchmark index as high as 6,000 (or higher), Stoltzfus’s call is more definitive.

Stoltzfus also acknowledges that, if anything, his bullish outlook might not be bullish enough.

Noting strong earnings, demographic factors, and the economy’s “resilience,” Stoltzfus wrote, “we might need to raise the target price again later this year should this economic and market outlook prove us too conservative in our projections.”

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