The S&P 500 is in a strong uptrend that is gaining momentum
following the 2024 election results. The robust technical outlook suggests that the market can increase by another 20% to reach 7,400. As wild as it sounds, the target is derived from not one but numerous projections that provide signal convergence and increased reliability. The first projection is based on the COVID-19 bubble. The COVID bubble began with a sharp, fear-driven price correction in the S&P that led the market into a buying opportunity and rally that increased its value by more than 100% over the next year. The increase was driven by stimulus spending and monetary policy, which still impact today's economy.
Economic Health Provides a Bid for Stocks
As much economic slowing as has happened in recent months, the U.S. economy continues to grow and fuel earnings growth for the S&P 500. The most problematic data is the labor market data, but even that isn’t bad. Regarding the stock market, a healthy labor market provides an underlying bid for stock because of the billions in retirement account savings invested each month. The US labor force is at record levels and growing, so the support it provides is substantial.
Big Tech Will Drive S&P 500 Gains in 2025
More factors than technical indications and labor markets drive the stock market in 2024 and the outlook for 2025. The primary is the ongoing supremacy of big tech and AI, which will likely gain momentum in 2025. The six largest S&P 500 companies account for more than 30% of the index value and are forecasted to rise by double-digits next year. The consensus price targets lag many underlying markets, but revision trends are positive for all of the S&P 500 leaders, with the high-end range predicting an average 30% gain.
The leaders, including NVIDIA (NASDAQ:NVDA), Amazon (NASDAQ:AMZN), and Meta Platforms (NASDAQ:META), are all indicated to gain 35% compared to early November price points, and the forecasts will likely rise over the coming year. These companies have proven that investment in data centers, the cloud, and AI pays off and are increasing their investments quarterly. Add in the tailwinds of falling interest rates and a business-friendly President, and the odds are high that the rally will extend well beyond the end of 2025 because of persistent outperformance relative to forecasts.(Cay)
Source: Investing.com
