Deutsche Bank raises year-end S&P 500 forecast: 'We see the earnings cycle having plenty of legs'

Deutsche Bank sees more room for the S & P 500 to run this year as strong earnings growth drives multiples. Binky Chadha, the firm's chief U.S. equity and global strategist, raised his year-end forecast for the broad index to 5,500 from 5,100. That level implies the benchmark average can add another 3.7% from where it finished last week. That call comes as Chadha hiked his outlook for earnings per share in the year by $8 to $258, which equates to a 13% increase from 2023. And if growth in the macroeconomy remains strong, he said 2024 EPS could come in at $271. "We see the earnings cycle having plenty of legs," he told clients. "While all the growth may not materialize this year, we see market confidence in a continued recovery rising by year-end, supporting equity multiples." .SPX YTD mountain S & P 500 Index year to date Chadha said he's been overweight on financial, consumer cyclical, material and utility stocks in this environment. Internationally, he's tactically overweight on Europe. To be sure, he said investors need to watch out for "sharp but short-lived" sell-offs tied to geopolitical risks. But Chadha said the economic backdrop will become the dominating market force in time. Chadha's 5,500-point forecast puts him more than 5% above the average analyst on Wall Street , who expects the index to pull back into year-end. The updated expectations come as the S & P 500 has roared back near all-time highs despite a correction at the start of the second quarter. The index was last up more than 11% since 2024 began.