S&P 500 index hits a new high again; institutions believe breaking 6000 points is just a matter of time.

According to the latest analysis from DataTrek Research, the US stock market may experience "profit momentum" in the next year, and the goal of the S&P 500 index reaching 6000 points by 2024 is not far away, especially after the Federal Reserve initiated a rate cut cycle last week. According to FactSet data, the S&P 500 index closed at 5718.57 points on Monday, setting a new historical record. Nicholas Colas, co-founder of DataTrek, pointed out in an email sent on Monday, "Contrary to the views of some pessimists, what drives profit growth in the S&P 500 is not only technology and artificial intelligence. In the next year, multiple industries will contribute to its growth, and may even exceed expectations." According to DataTrek's data, Wall Street analysts expect earnings per share of the S&P 500 index to grow by 15.2% next year, which is higher than this year's 10%. Colas cited FactSet data showing that earnings growth expectations for next year are widespread, particularly in cyclical industries such as energy, materials, and industrial sectors. Colas also pointed out that with the Federal Reserve entering a "loose mode" despite steady economic growth in the US, the stock market may continue to rise. In terms of corporate profit expectations, Wall Street analysts expect earnings per share of the S&P 500 index to rise to $258 in the next four quarters, an increase of about 12% from the past four quarters. Meanwhile, the current price-earnings ratio of the S&P 500 index is 22.1 times, higher than the five-year average of 19.5 times and the ten-year average of 18 times, but still lower than the peak of 23.2 times set in 2020. Colas concluded, "The target of reaching 6000 points for the S&P 500 index represents a certain 'peak confidence' price expectation, based on a optimistic but achievable estimate of index earnings capability." The S&P 500 index hit a record high after the Federal Reserve cut interest rates On Monday, the S&P 500 index rose slightly, surpassing the previous high set on September 19. This was the second day of the Federal Reserve announcing a 50 basis point rate cut to initiate its rate cut cycle. John Madziyire, Senior Portfolio Manager for US Treasuries and TIPS at Vanguard, said in a phone interview, "The probability of a soft landing has increased." He pointed out that the US economy is showing resilience, and inflation is easing in the context of a "tightening" monetary policy. He further stated that the Federal Reserve is currently recalibrating the benchmark interest rate to a neutral level that will neither slow down nor stimulate the economy. Last week, the Federal Reserve lowered the target range for the benchmark interest rate to 4.75% to 5%. Madziyire believes that the so-called neutral interest rate may be close to 3%. Interest rates in the bond market have declined this year, with yields on 10-year and 2-year US Treasury bonds falling this month and year-to-date. On Monday, the yield on the 10-year US Treasury bond rose slightly to 3.74%, while the yield on the 2-year bond remained at 3.576%, according to Dow Jones market data. Colas stated that in an environment of declining corporate profit rates, reaching 6000 points for the S&P 500 index "is not difficult," representing a 5.2% increase compared to the closing price on Friday.