Keep buying S&P 500 as US exceptionalism goes 'from strength to strength' - SocGen
Analysts at SocGen told investors in a note Thursday to keep buying the S&P 500 as “US exceptionalism is going from strength to strength.”
The bank’s comments follow the Federal Reserve meeting on Wednesday, which saw the US central bank hold steady on interest rates and stick with its forecast for three interest rate cuts this year.
Fed Chair Jerome Powell still projected some caution over sticky inflation. However, market participants were encouraged by Fed officials keeping their forecasts for lower rates this year. Powell also noted the continued resilience in the U.S. economy, which is a trend that bodes well for corporate earnings.
The news and subsequent comments from Federal Reserve Chair Jerome Powell helped to lift the S&P 500, which closed above 5,200 for the first time on Wednesday.
The S&P 500 closed 0.9% higher in Wednesday’s session to a record of 5,223.46.
Meanwhile, US futures are also in the positive, with S&P 500 futures currently showing a 0.4% gain at 5,245.3 as of 7:22 am ET on Thursday. The Nasdaq closed 1.25% higher on Wednesday. Nasdaq futures have climbed 0.8%.
Analysts at SocGen said the macro themes continue to improve in the US.
The firm noted the “reshoring ‘boom’” that led them to turn bullish on Industrials in November 2022, the Nasdaq-100’s artificial intelligence ‘boom’ that prompted their bullish view in June 2023, and now the improving credit conditions and lending standards, which have led them to upgrade US Financials for the first time since December 2021.
“Despite widespread market optimism, we view this as rational rather than excessive, as profit growth continues to increase and set new records for the S&P 500,” wrote SocGen.
The firm upgraded its S&P 500 target level to 5,500,
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