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Citi Raises S&P 500 Year-End Price Target to 4,600, Anticipates Greater Likelihood of a Smooth Landing

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Citi Strategist Raises S&P 500 Price Target for 2023

Higher Expectations for the S&P 500

Citi U.S. equity strategist Scott Chronert has revised his year-end 2023 S&P 500 price target to 4,600, signaling increased confidence in a soft landing for the market. Additionally, he has raised his mid-2024 target to 5,000, reflecting a more positive outlook for the index. Previously, Chronert had predicted the S&P 500 to reach 4,000 by the end of 2023 and 4,400 by mid-2024. He attributes the revised targets to favorable conditions and a higher probability of a soft landing.

Positive Growth Outlook and Valuations

In his report, Chronert emphasizes the stronger earnings growth expected in 2024 as a significant factor supporting the upward revision of the price targets. While he acknowledges that growth cluster valuations are currently high, he believes they are justified by fundamental drivers. On the other hand, he notes that cyclicals are trading below longer-term averages, while defensives are mostly in line with history. Chronert also highlights the potential of a "new growth era" characterized by opportunities in artificial intelligence, reduced cyclicality, and strong free cash flow generation.

The Road Ahead

With the new targets in place, the S&P 500 has only a 0.4% potential upside from its Friday closing level to the end of the year. However, it is anticipated to gain over 9% by mid-2024. These projections suggest cautious optimism regarding future market performance. Chronert's assessment indicates that while there may be concerns about stretched valuations, there are underlying factors that support the current levels. The strategist concludes by expressing his enthusiasm for the possibility of a new growth era.

Conclusion: A "Hot Take" on the Impact for New Businesses

The recent upward revision of the S&P 500 price targets by Citi U.S. equity strategist Scott Chronert indicates a growing confidence in the market's performance. This news may have a significant impact on new businesses, providing both opportunities and challenges. On the positive side, the revised price targets reflect a positive growth outlook for the market, suggesting that there may be an environment of increased investor confidence and economic stability. This can be advantageous for new businesses seeking funding or looking to go public, as a bullish market tends to attract more investment and provide favorable conditions for initial public offerings (IPOs). Moreover, Chronert highlights the potential of a "new growth era" characterized by opportunities in artificial intelligence, reduced cyclicality, and strong free cash flow generation. These trends can potentially benefit innovative startups and technology-driven companies, offering them a platform for growth and success. However, the upward revision of price targets also raises concerns about stretched valuations and the possibility of a market correction. New businesses aiming to enter the market or expand their operations need to approach the situation with caution. It is essential to thoroughly assess the market conditions, understand the potential risks, and ensure that their business models and strategies are robust enough to withstand potential market fluctuations. Overall, the revised S&P 500 price targets provide a mixed bag of opportunities and challenges for new businesses. While there is optimism for growth and investment, prudent analysis and risk management strategies are crucial to navigate the ever-changing market landscape. Article First Published at: https://www.cnbc.com/2023/07/28/citi-raises-year-end-sp-500-price-target-to-4600.html

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