Wells Fargo Is Wall Street's Biggest Believer in S&P 500 Rally

Wells Fargo Securities’ Christopher Harvey just put Wall Street’s highest target on the S&P 500 Index for 2024 based on his expectation that the U.S. equity rally will power on through the year.

Harvey, the firm’s head of equity strategy, lifted his year-end forecast on the benchmark to 5,535 from 4,625 previously, making him the biggest bull among strategists tracked by Bloomberg.

The growth potential from artificial intelligence technology and an improved earnings outlook are among the upside catalysts he sees, along with longer time horizons and higher valuation thresholds from investors, Harvey told clients in a note on Monday.

“In our view, the bull market, AI’s secular growth story, and index concentration have shifted investors’ attention away from traditional valuation measures and toward longer-term growth and discounting metrics,” the strategist said. “Since the end of 2022, investors’ valuation thresholds seemed to decrease while time horizons increased, a function of this secular optimism.”

U.S. stocks have had a roaring start to the year, notching nearly two dozen closing highs as resilient economic growth supports corporate earnings, and with the Federal Reserve possibly ready to cut interest rates later this year.

The S&P 500 is up 9% since the start of January after rising 24% last year.

Harvey joins peers at several other major Wall Street firms — including Goldman Sachs Group Inc., Bank of America Corp., and Oppenheimer Asset Management — that have ratcheted up their 2024 outlooks for US equities in recent months.

His new call for the S&P 500 implies a roughly 6% gain from Monday’s level of about 5,200.