Rationally, we know that it’s a fool’s errand to try to predict market movements, but it’s standard practice for firms to communicate their outlook for equity markets from year to year. Our Chart of the Month illustrates how difficult this practice has been for firms recently. Analysts’ expectations drastically underestimated the market strength of 2020 and 2021, as the S&P 500 produced returns well above even the loftiest of analyst expectations. Analysts learned from their mistakes in 2022 and raised S&P 500 price targets to a median of 5,000, only for the market to experience a significant pullback as it adjusted to rapidly rising interest rates. The S&P 500 Index closed 2022 at 3,840, substantially underperforming analysts’ expectations. 

Market uncertainty led to an extremely wide range of analyst expectations in 2023, ranging from as low as 3,250 to as high as 4,750. The band of possible outcomes nearly triple the spread of analyst price targets in 2020 and 2021 and illustrated the extreme number of unknowns surrounding inflation and the Fed’s interest rate policy. Even so, the market ended the year slightly outside analyst expectations. 

The median price target for 2024 sits at 5,100. After a strong first half of the year, the S&P 500 Index is trading around 5,460, which implies roughly a 6-7% downside from today’s Index level. As the chart illustrates, analysts’ expectations have not been a great indicator of what is to come, and the market often surprises and produces returns beyond even the most extreme price targets. 

By Ryan Zywotko, CFA, CMT

Director of Investments

CAISSA Wealth Strategies