Stock Market Could Rally Another 34% By 2026, Says Bank Of America

The stock market’s long-term bull rally, now in its 11th year, is poised to continue, with the S&P 500 potentially surging by 34% by the end of 2026, according to Bank of America.

What Happened: The bank’s technical strategist, Stephen Suttmeier, predicts that the S&P 500 could reach 7,000 by late 2026, representing a 34% increase from its current level, reported Business Insider. The S&P 500 has already surged 14% to record highs since December.

Suttmeier sees no end in sight for the secular bull rally until at least the end of the 2020s. He also pointed out that the S&P 500’s breakout above its prior record high of about 4,800 in January signaled another price objective of 6,150, representing an 18% upside from potential levels.

“The SPX has rallied 46% from its October 2022 low,” Suttmeier said. “The median rally from a big low of 106% lasts approximately four years, suggesting that SPX 7000 is not ruled out into late 2026.”

“The secular bull markets from 1950-1966 and 1980-2000 lasted 16 and 20 years, respectively, which means that the current secular bull market is middle-aged and can extend until 2029 to 2033,” Suttmeier said.

See Also: Cathie Wood Says Bitcoin Could Skyrocket To $3.8M By 2030 Thanks To ‘Institutional Green Light’

However, Suttmeier also warned that investors should watch the 4,800 and 4,600 levels for support, representing a potential downside of as much as 12% from current levels.

Why It Matters: This forecast by Bank of America comes in the wake of a stark warning about the future of the S&P 500. Paul Dietrich, the chief investment strategist at B. Riley Wealth Management, has predicted that the index could plummet by as much as 49% when the next recession hits due to its current overvaluation.

On the other hand, Ed Yardeni, the president of Yardeni Research, has been steadfast in his bullish outlook, predicting a 26% surge in the S&P 500 by 2026 to 6,500. This forecast aligns with the notion of a “virtuous investment cycle” that could drive corporate profits to new heights, as suggested by Bank of America’s strategist Savita Subramanian.

Despite concerns about an AI bubble burst, JPMorgan analysts have indicated that the mega-cap stocks, including those in the S&P 500, retain reasonable valuations relative to the average prices of the S&P 500 over the last five years.

Read Next: Dogecoin Soars As Elon Musk’s X Payments Gains Ground, Enthusiasts Rally With $800M Boost

Image Via Shutterstock