Bank of America hikes year-end target for S&P 500, citing focus by companies on efficiency and A.I.

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Bank of America strategist Savita Subramanian said that corporate earnings are becoming more stable.

The first-half rally for stocks in 2023 is supported by fundamentals and still has upside remaining, according to one of Wall Street's top strategists. In a note to clients on Sunday, Bank of America strategist Savita Subramanian hiked her year-end price target for the S & P 500 to 4,300 from 4,000. The new target is about 2.6% above where the index closed on Friday. The S & P 500 is already up more than 9% year-to-date. .

Over the past few decades we have enjoyed financially engineered growth: cheap financing, buybacks and cost-cutting," Subramanian wrote. "Today, Corporate America has shifted focus to structural benefits – efficiency/automation/AI and have bought themselves time to adapt via long-dated fixed rate debt. Old economy cyclicals, capital-starved since 2008, have become disciplined and self-sufficient, evidenced by lower betas and more stable earnings.

 

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