By Barbara Kollmeyer
Critical information for the U.S. trading day
It's a four-day week for markets, even if both the Fed's favorite inflation gauge and comments from Fed Chair Jerome Powell are coming on that Friday break.
The S&P 500 SPX closed out last week with its biggest weekly gain since December, and a third session above the 5,200 level, which means several year-end targets for Wall Street banks have been taken out - nine out of 15 tracked by MarketWatch. Oppenheimer on Monday lifted its target to 5,500, putting it at the top with Societe Generale, which last week did the same.
While strategists were largely wary headed into 2024 after a bullish 2023, they seem to be getting braver on the whole.
In our call of the day, a Goldman Sachs team led by its chief U.S. equity strategist, David Kostin, makes the case for the S&P 500 to hit 6,000 by the end of 2024, thanks to a relentless rise in big technology companies. The bank has twice lifted its year-end index call - its baseline forecast is 5,200.
And while other banks have been busying adjusting targets, Goldman isn't alone with its 6K call.
Barclays head of U.S. equity strategy, Venu Krishna, last month laid out a bull case for 6,050 hinging on tech earnings continuing to exceed forecasts. Other finance minds on X claim to have been there much earlier, while last year, Yardeni Research's Ed Yardeni made a call for 6,000 by 2025 that turned heads.
Making the 6,000 case, Kostin and co. say the current growth stock rally is different from the 2021 and tech bubble episodes "because investors today focus on profitability." And while there are plenty of worries about over-exuberant artificial intelligence optimism, they say Big Tech valuations remain far from "bubble" territory:
But Goldman suggests investors pay attention to other potential scenarios. They also lay out a "catch-up" scenario that takes the S&P 500 to 5,800, as the rest of the market catches up to the megacap tech giants. They say that would require a "shift in the interest rate outlook without a deterioration in the economy." Further confidence in disinflation would be needed as a chunk of the market is still weighed by higher-for-longer rate worries.
They also flag a potential "catch-down" setup, taking the S&P 500 down to 4,500 by year-end. This would happen if the big tech companies fail to meet elevated growth expectations. "Crowding risk among the largest stocks and stretched investor positioning could exacerbate any 'catch-down' scenario," they said.
"Each megacap tech stock, except TSLA, sits atop our list of hedge fund favorite long positions," said Kostin and co., who add that downside would be limited because the Fed has plenty of room to cut in case of a negative growth shock. For investors fretting a near-term pullback, they suggest looking at defensive stocks.
Speaking of big tech: The EU has opened probes into Apple (AAPL), Google (GOOGL )and Meta (META) over compliance with its new Digital Markets Act.
The markets
Stocks SPX are off to a weaker start, with technology COMP leading the way south, and Treasury yields BX:TMUBMUSD10Y BX:TMUBMUSD02Y slightly higher. Oil prices (CL.1) are firmer and gold (GC00) and the dollar DXY are also up. Follow latest market updates in MarketWatch's Live Blog.
Read: Record gold price flashes warning for Fed's rate-cut hopes
The buzz
Atlanta Fed Pres. Raphael Bostic will speak at 8:25 a.m. - on Friday he forecast just one rate cut this year, instead of two. Chicago Fed President Austan Goolsbee will appear at 9:05 a.m., then Fed Gov. Lisa Cook at 10:30 a.m. In between, new home sales are coming at 10 a.m.
Read: Why a Fed rate cut in June is not yet a done deal
Boeing stock (BA) is rising after news CEO Dave Calhoun will step down at the end of year, following recent quality-control issues.
China is reportedly rolling out new rules to stop Intel (INTC), AMD (AMD) and Microsoft (MSFT)tech from being used in government computers.
Novo Nordisk (DK:NOVO.B) will pay up to $1.1 billion for Cardior Pharmaceuticals in a bid to target cardiovascular disease.
Former President Donald Trump will on Monday need to come up with a $464 million bond to appeal a corporate fraud conviction or face seizure of his assets. Some are wondering if his newly merged Trump Media (DWAC) will amend lockup rules so that Trump can pay that bond bill.
In Russia, four men facing terrorism charges over Friday's deadly concert hall attack appeared badly beaten before a Moscow court.
Best of the web
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The chart
Deutsche Bank's March 2024 global financial survey is in, with 250 responses. Among the findings compiled by strategist Jim Reid and analyst Cassidy Ainsworth-Grace, respondents weigh on which Big Tech stock will deliver the best return in the next 5 years. It's not Nvidia:
The tickers
These were the top-searched tickers on MarketWatch as of 6 a.m.:
Ticker Security name NVDA Nvidia TSLA Tesla CGC Canopy Growth AMD Advanced Micro Devices AAPL Apple TLRY Tilray Brands GME GameStop SMCI Super Micro Computer DWAC Digital World Acquisition Corp. NIO Nio
Random reads
Barcelona's Sagrada Familia church - 144 years in the making.
One of the world's most grueling races and its first female finisher.
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-Barbara Kollmeyer
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03-25-24 1030ET
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