US stocks are going crazy! Bank of America has become the biggest bull, bullish on S&P 500 rising to 5400 points by the end of the year.

Savita Subramanian of Bank of America is the latest stock strategist to raise the target for the S&P 500 index to the highest level on Wall Street, as the unexpected surge earlier this year caught forecasters off guard. Subramanian, head of US stocks and quantitative strategy at Bank of America, now predicts the index will reach 5400 points by the end of the year, up from her earlier target of 5000 points, indicating a potential increase of about 5% from last Friday's close. She stated that various indicators are flashing bullish signals, indicating that future earnings growth will be stronger and profit margins will remain surprisingly resilient. In a report to clients on Sunday, Subramanian wrote, "The bull market does not end on optimism we are not there yet." "Market sentiment has improved, but the areas of exuberance are limited." According to approximately 24 sell-side strategists tracked by Bloomberg, Bank of America's target of 5400 points for the S&P 500 index in 2024 is now one of the most bullish targets on Wall Street. She joins Ed Yardeni of Yardeni Research and Jonathan Golub of Credit Suisse Group, both of whom share the same outlook for the end of the year. The frenzy of artificial intelligence has caught Wall Street forecasters by surprise and has led to a race among strategists to keep up with a stock market rebound that has exceeded their expectations. In recent weeks, Piper Sandler, Credit Suisse, and Barclays have all raised their forecasts for the S&P 500. Goldman Sachs and Credit Suisse have raised their expectations for the US economy twice since December last year when the Federal Reserve turned dovish. The S&P 500 closed above 5100 points on Friday, surpassing the year-end average estimate of 4899.40 points for the first time in history. Bank of America strategists stated that leading indicators show the bank's earnings estimate at $235 per share, while the widely expected $243 per share seems to be a "reasonable" expectation given stronger economic growth and higher profit margins. After rising 24% in 2023, the S&P 500 has risen by 7.7% so far this year. Fourth-quarter earnings reports once again show that corporate profits are improving. So far, 76% of the companies in the index have exceeded expectations out of the 98% of market capitalization reported. Investors are generally optimistic about stocks that exceed expectations in terms of profits and sales, with the median performance of these stocks exceeding the benchmark index by 1.5% within a day of announcing their results. However, Subramanian believes that there is a risk of a recent pullback in the increasingly bullish sentiment on Wall Street. For example, their sell-side indicator tracks the average recommendation allocation of US sell-side strategists. The index slightly increased last month and is now close to issuing a bearish signal for the first time since April 2022, rather than a bullish one. Michael Kantrowitz of Piper Sandler was the most bearish on the US stock market in 2023, and last month he raised his forecast for the S&P 500 to 5250 points. This expectation exceeds some bullish forecasts from peers such as John Stoltzfus of Oppenheimer Asset Management and Thomas Lee of Fundstrat Global Advisors, who both predict the S&P 500 will reach 5,200 points by the end of the year. Even Mike Wilson of Morgan Stanley, one of the most famous bears on Wall Street, now expects the US stock market rally to broaden into less favored areas rather than the dominant large tech companies that have led the rally so far. His target for 2024 remains at 4500 points, which means a decrease of about 12% from last Friday's closing point. Subramanian believes that the rise in the S&P 500 is still concentrated in a few large-cap stocks, and although the earnings gap between the so-called "big seven" and the other components of the S&P 500 will begin to narrow, she expects the advantage of the giants to widen. While Nvidia, Meta, Amazon, and Microsoft have exceeded expectations, Tesla and Alphabet have disappointed, and Apple has shown weakness in China. Investors are primarily awaiting earnings reports to be released later this week to gather further clues about consumer health, including reports from companies such as Target, Kroger, Gap, and Foot Locker.