As U.S. equities flirt with a fresh all-time high, the most optimistic strategist on Wall Street is doubling down on his view that the S&P 500 Index will soar 12 percent in less than five months.
By the end of this year, the index will reach 3,200 points as the economy and earnings drive the next leg of the bull market, according to Canaccord Genuity LLC’s Tony Dwyer. Reset global expectations and a demographic tailwind will also fuel a second-half ramp-up, the strategist said, after the gauge climbed to within a percentage point of surpassing its January peak.
“Any pause in the upside should be considered opportunity,” Dwyer wrote in a note to clients this week. “There is no doubt the unpredictable news backdrop of a potential trade war with China and a rise back to 3 percent in the 10-year U.S. Treasury yield can cause increased volatility, but the fundamental backdrop commands using it as an opportunity to add risk.”
The U.S. benchmark surged to a record 2,872.87 in January before a spike in volatility and a jump in interest rates sent stocks spiraling into a 10 percent correction by early February. Since then, the index has steadily recovered and closed at 2,857.70 on Wednesday.
Key to Dwyer’s bullish thesis are factors already paramount to the bull market: ever expanding profits and rising confidence among consumers and businesses. U.S. investors are scaling the wall of worry that’s clouded by unpredictable developments in the trade war, cheered by the Federal Reserve’s belief that the economy can withstand higher rates.
Dwyer’s target for the benchmark U.S. stock gauge is the highest among analysts surveyed by Bloomberg. The Canaccord strategist sees the rally continuing into next year, with an end-2019 target of 3,360, a further gain of 5 percent on 2018’s estimate.