Deutsche Bank expects S&P 500 to end 2024 at 5100, new Street high

Deutsche Bank strategists anticipate that the will surge to a record 5,100 by the end of the next year.

Analysts at the European banking giant say stock valuations are not excessively high, with fair value estimated at 18x and a range of 16x-20x.

Despite solid earnings growth, market perceptions remain subdued, which leaves enough room for valuations to re-rate higher. While Deutsche sees a “mild short” recession next year, it still expects earnings for companies in the S&P 500 to rise 10%.

“If earnings growth continues to recover as we forecast, valuations will remain well supported around the top of the range as is typical on the pricing in of a pickup in earnings growth,” the analysts said.

The analysts note that the market appears to be following a historical pattern of sharp, short-lived selloffs followed by rapid recoveries. They predict that stocks may experience a modest, brief selloff in the event of a slowdown or recession.

Moreover, they highlight the historical tendency for equities to rally after U.S. presidential elections, irrespective of the winning party. The analysts identify the tight labor market as a significant upside risk, historically preceding periods of rapid productivity growth.

According to Reuters, the median 2024-end forecast for the S&P 500 is 4700. Recently, analysts at RBC Capital Markets and Bank of America said they expect the U.S. benchmark index to end the next year at 5000.