HSBC Raises S&P 500 Year-End Target to 6,400 Amid AI Boom and Easing Policy Uncertainty
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HSBC lifts S&P 500 year-end target to 6,400 on AI boom, easing policy uncertainty
Aug 5 (Reuters) - HSBC on Tuesday raised its year-end S&P 500 (.SPX), opens new tab index target by more than 800 points to 6,400, citing euphoria around artificial intelligence and easing U.S. policy uncertainty. The upgrade comes after similar moves from other brokerages, including Goldman Sachs and BofA Global Research, last month. "The AI trade is powering the tech/AI cohort higher (roughly half of the S&P 500), while reduced policy uncertainty (namely tariffs) is fueling the 'rest' of the market," HSBC strategists wrote in a note. The S&P 500 has rebounded 30.8% since its April 8 low, following U.S. President Donald Trump's 'Liberation Day' tariffs. The index notched fresh highs in July, driven by upbeat earnings from tech giants Microsoft (MSFT.O), opens new tab and Meta Platforms (META.O), opens new tab, which renewed investor optimism around AI. HSBC's new target represents a marginal 1.1% upside to the index's last close at 6,329.94. Its previous target was 5,600 for the index. The brokerage expects slower growth in the U.S. in the second half of the year, allowing the Federal Reserve to reduce interest rates, and sees the tariff impact to remain muted and temporary. But in its bull-case scenario, HSBC expects the index to end the year at 7,000. "We believe there is still room for margins to expand in tech...don't see valuations as stretched for the tech sector," HSBC strategists said in a note to clients. Reporting by Kanchana Chakravarty in Bengaluru; Editing by Anil D'Silva and Shinjini Ganguli Our Standards: The Thomson Reuters Trust Principles., opens new tab
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HSBC lifts S&P 500 year-end target to 6,400 on AI boom, easing policy uncertainty
(Reuters) -HSBC on Tuesday raised its year-end S&P 500 index target by more than 800 points to 6,400, citing euphoria around artificial intelligence and easing U.S. policy uncertainty. The upgrade comes after similar moves from other brokerages, including Goldman Sachs and BofA Global Research, last month. "The AI trade is powering the tech/AI cohort higher (roughly half of the S&P 500), while reduced policy uncertainty (namely tariffs) is fueling the 'rest' of the market," HSBC strategists wrote in a note. The S&P 500 has rebounded 30.8% since its April 8 low, following U.S. President Donald Trump's 'Liberation Day' tariffs. The index notched fresh highs in July, driven by upbeat earnings from tech giants Microsoft and Meta Platforms, which renewed investor optimism around AI. HSBC's new target represents a marginal 1.1% upside to the index's last close at 6,329.94. Its previous target was 5,600 for the index. The brokerage expects slower growth in the U.S. in the second half of the year, allowing the Federal Reserve to reduce interest rates, and sees the tariff impact to remain muted and temporary. But in its bull-case scenario, HSBC expects the index to end the year at 7,000. "We believe there is still room for margins to expand in tech...don't see valuations as stretched for the tech sector," HSBC strategists said in a note to clients. (Reporting by Kanchana Chakravarty in Bengaluru; Editing by Anil D'Silva and Shinjini Ganguli)
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HSBC has significantly increased its year-end target for the S&P 500 index to 6,400, citing the AI boom and reduced policy uncertainty as key factors driving market growth.
HSBC Raises S&P 500 Target Amid AI Boom
HSBC has significantly raised its year-end target for the S&P 500 index by more than 800 points to 6,400, citing the artificial intelligence (AI) boom and easing U.S. policy uncertainty as key drivers
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. This upgrade aligns with similar moves by other major brokerages, including Goldman Sachs and BofA Global Research, who adjusted their forecasts last month.
Source: Reuters
AI and Policy Factors Driving Market Growth
HSBC strategists attribute the market's upward trajectory to two main factors:
- The AI trade: Powering the tech/AI cohort, which comprises roughly half of the S&P 500.
- Reduced policy uncertainty: Particularly regarding tariffs, which is fueling growth in the rest of the market
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The S&P 500 has demonstrated remarkable resilience, rebounding 30.8% since its April 8 low, which followed U.S. President Donald Trump's 'Liberation Day' tariffs. In July, the index reached new highs, buoyed by strong earnings reports from tech giants Microsoft and Meta Platforms, which reinvigorated investor optimism around AI
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.HSBC's Market Outlook
HSBC's new target of 6,400 represents a modest 1.1% upside from the index's last close at 6,329.94, a significant increase from their previous target of 5,600
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. The brokerage's outlook includes several key predictions:- Slower U.S. growth in the second half of the year
- Potential Federal Reserve interest rate reductions
- Muted and temporary impact of tariffs
In an optimistic scenario, HSBC projects the index could reach 7,000 by year-end
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.Related Stories
Tech Sector Potential
HSBC strategists remain bullish on the tech sector, stating, "We believe there is still room for margins to expand in tech...don't see valuations as stretched for the tech sector"
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. This perspective suggests continued growth potential in the AI and technology segments of the market.Market Implications
The raised S&P 500 target reflects growing confidence in the market's ability to leverage AI advancements and navigate policy uncertainties. As investors and companies continue to explore AI applications, the tech sector may see further expansion and increased valuations.
However, it's important to note that market predictions are subject to various factors and uncertainties. Investors should consider multiple perspectives and conduct thorough research before making investment decisions based on these forecasts.
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