March 25 (Reuters) - HSBC on Monday raised its year-end target for the benchmark S&P 500 to 5,400 from its prior forecast of 5,000, assuming a soft-landing for the U.S. economy and implying about 3% upside to the current levels.
The revised target presupposes economic growth to remain resilient and potential rate-cuts to bode well for non-technology stocks.
"The higher target stems from better earnings expectations, supported by resilient GDP growth, recent earnings beats and positive sentiment from corporates in the last earnings season," HSBC strategists wrote in a note.
HSBC has joined peers BofA Global Research and UBS in forecasting that the index would end 2024 at 5,400. The S&P 500 on Friday registered its biggest weekly percentage gain of 2024.
The brokerage expects the second half of 2024 to be "more volatile" due to U.S. elections, elevated earnings expectations and a shifting narrative from "when" to "how much" the Fed will cut interest rates.
The U.S. Federal Reserve left its bank rate unchanged last week and stuck with its projection of three interest-rate cuts by year's end.
Under its bear-case scenario, HSBC expects a year-end target of 4,800 if economic data continues to run hot, which could lead to a resurgence of inflation.
(Reporting by Reshma Rockie George in Bengaluru; Editing by Shilpi Majumdar and Arun Koyyur)
