The S&P 500 could jump another 13% to a record high by the end of the year thanks to expected gains in technology and stocks, according to BMO's chief investment officer. Brian Belski said on Friday that his trial will see the benchmarks hover around his current level for the rest of the year - but pointed to a critical situation where a surprise in four quarters would see him surpass his current record level. of under 4,800 points. Financial services grabbed the headlines for what went wrong earlier this year when the collapse of Silicon Valley Bank in March sparked a crisis for local lenders. But technology and communications stocks have fared better, with the so-called "Magnificent Seven" all picking up returns and iShares' Core S&P 500 UCITS exchange-traded fund trailing the latest share of both sectors, up 18%. year to date. Belski's target of 5,050 points would see the S&P 500 continue its run through the first half of 2023, looking up 16% already this year. Many analysts have pointed to the rise of AI as the main driver of the stock market rally - but Belski believes that stocks and income assets have entered a state of "normalization" as the Federal Reserve reaches the end of its easing cycle, after all. leading to a return to 2022.
"Our bull case is 5,050 – meaning brand new price highs on the S&P 500," Belski, who is BMO Capital Markets' chief investment strategist, told CNBC's "Squawk on the Street". "What we believe could drive that is surprising earnings growth, especially in the fourth quarter," he added, citing tech, communications, and financials as the three sectors that could post better-than-expected results. "We actually think that this is all part of the normalization phase where you have 10-year Treasury [yields] in the 3% to 4% range, earnings growth in a high single-digit range, market performance in high single-digit or low double-digit range," he told CNBC. "That's a really great position to have in both bonds and stocks going forward for at least the next three to five years," Belski added.
