"S&P 500 Could Surpass 5,000 by 2023 End, Claims Portfolio Manager"

Strong Economy Points to S&P 500 Breaking 5,000-Point Threshold by End of 2023

Economic Outlook for the Second Half of 2023

Recent inflation data suggests that the S&P 500 could reach the 5,000-point threshold by the end of 2023, according to Peter Essele, head of portfolio management for Commonwealth Financial Network. The consumer price index and producer price index for June showed easing costs across the board, indicating a strong economy. Essele believes that the second half of 2023 will be much stronger than the first half, with moderating prices, job growth, and wage gains translating into a surge in economic activity. This positive outlook supports the prediction of the S&P 500 reaching 5,000 points by the end of the year.

Winning the Fight Against Inflation

Essele also views the recent inflation data as a sign that the Federal Reserve's fight against inflation has been successful. Both the CPI and PPI showed less growth in prices than economists had expected. This environment leads Essele to predict that consumer services and technology stocks, especially software names, will continue to outperform. On the other hand, he expects energy, materials, and consumer staple stocks to lag behind. Additionally, larger-cap names are likely to perform better than their smaller counterparts.

Bullish Prediction Contrary to Wall Street Forecasts

Essele's prediction of the S&P 500 reaching 5,000 points is more optimistic than the average forecast of Wall Street market strategists. CNBC Pro's survey shows that the average target is 4,255, which is 4.9% lower than where the index closed on Wednesday. The highest target among the 15 strategists surveyed is 4,575, with Sam Stovall from CFRA being the most optimistic. Despite the mixed forecasts, Essele remains confident in his prediction, buoyed by the positive economic data and market trends.

Conclusion

The recent inflation data and positive economic indicators point to a strong second half of 2023, which could propel the S&P 500 to break the 5,000-point threshold. Essele's prediction is based on the easing of costs, job growth, and wage gains, indicating a surge in economic activity. This bullish outlook is contrary to Wall Street forecasts, but Essele believes that consumer services and technology stocks will continue to outperform, while energy, materials, and consumer staple stocks might lag behind. With the economy showing signs of strength, investors will be closely watching the S&P 500's performance in the coming months.

Hot Take: How the Strong Economy and S&P 500 Outlook May Impact New Businesses

As the economy shows signs of strength and the S&P 500 is predicted to break the 5,000-point threshold by the end of 2023, new businesses could benefit from the positive market trends and investor confidence. The recent easing of costs, job growth, and wage gains indicate a surge in economic activity, providing a favorable environment for startups and entrepreneurs. One area that may particularly benefit from this bullish outlook is the technology sector. Peter Essele, head of portfolio management for Commonwealth Financial Network, predicts that consumer services and technology stocks, especially software names, will continue to outperform. This suggests that new businesses in the tech industry could experience increased investor interest and funding opportunities. On the other hand, energy, materials, and consumer staple stocks are expected to lag behind. For new businesses operating in these sectors, it may be more challenging to attract investments in the current market climate. However, it's worth noting that larger-cap names are likely to perform better than their smaller counterparts. This means that new businesses with solid growth potential and scalability could still attract investor attention. While Essele's prediction is more optimistic than the average forecast of Wall Street strategists, the positive economic indicators cannot be ignored. As the S&P 500 continues to soar, investor sentiment is likely to remain positive, leading to increased opportunities for new businesses to secure funding and thrive in the market. Overall, the strong economy and positive market outlook can create a favorable landscape for new businesses. Entrepreneurs should take advantage of the current economic momentum by carefully positioning their ventures to align with the sectors expected to outperform. By demonstrating innovation, scalability, and growth potential, new businesses have a greater chance of attracting investment and capitalizing on the opportunities presented by a thriving economy and a robust S&P 500 index. Article First Published at: https://www.cnbc.com/2023/07/13/sp-500-can-easily-top-5000-by-the-end-of-2023-portfolio-manager-says.html