The bonanza of S&P 500 has two reasons according to analysts of UBS Group N. They point out that the Strong US economic expansion and increased investments in artificial intelligence could boost index gains in 2024 by 11% to $250.
His final goal for this year is 5,500 points.
Among the factors driving the strong economic expansion in the US we can find:
- Growing business profits
- Downward inflation
- Possible reduction in interest rates from the Federal Reserve
Without forgetting that the Increased investments in artificial intelligence have helped the S&P 500 reach new highs.
Healthy economic environment
UBS analysts maintain that The American economy is on solid footing with a vigorous labor market.where the Unemployment benefits have decreased and the adjustment of salaries keeps purchasing power strong of the citizen.
He employment growth in construction and factories predicts a good sign for the economy.
Analysts expect that the decline in inflation persists.
“The ability of U.S. businesses to set prices is moderating, pressure on wages is easing, consumer inflation expectations remain within reasonable limits, and the housing cost element is likely to of the Government’s inflation figures continue to decline,” they added from UBS.
This scenario would lead to a interest rate reduction policy by the FED with two possible cuts for this year. Being the first to September.
“With the Federal Reserve now prepared to lower interest rates if economic growth weakens, this should help minimize the scope of potential risks to the stock market,” the experts added.
Artificial intelligence as the main driver
UBS has highlighted that the Advances in artificial intelligence or AI have increased capital expenditure of major technology companies.
“We believe the demand underlying these advances will remain strong as technology companies compete for a leadership position in the developing AI market, and as companies across various sectors integrate AI tools into their operations,” the analysts noted.
