Bank of America raises S&P 500 target on resilience of US corporations

Bank of America strategists raised their year-end S&P 500 target from 5,600 to 6,300, with a 12-month goal of 6,600 being set. According to the firm, US corporate performance has remained strong despite uncertain trade policies and broader economic instability.

Bank of America notes that US companies continue to report profits. Meanwhile, estimate dispersion, which is a measure of earnings per share uncertainty, remains near historic lows.

Currency volatility and rising inflation haven’t hurt S&P 500 profit margins since COVID-19. Companies have either adapted to the changes or dropped out of the index.

The index surged after the US suspended import tariffs on key trading partners on April 9. However, Bank of America warns that it is hard to find a positive catalyst for the S&P 500 to continue its rally in the third quarter.

On the other hand, the long-term outlook for the index remains positive. Rising US inflation favors assets that hedge against price growth.