Big changes could be coming for the S&P 500 (SPX) and the tech sector, according to recent reports from Barclays and Stifel. Barclays points out that the huge earnings growth gap between major tech companies—like Nvidia (NVDA), Apple (AAPL), Google (GOOGL) (GOOG), Meta (META), Microsoft (MSFT), and Amazon (AMZN)—and the rest of the S&P 500 may close by the end of this year or early next year.
This could reduce big tech’s dominance in the market and allow for a more widespread market rally. Analyst Venu Krishna thinks that as tech’s super-high earnings growth slows down, other companies in the S&P 500 will see a big boost, which will make the market healthier overall if the economy stays supportive.
On the other hand, Barry Bannister from Stifel has a bold prediction for the S&P 500. He thinks it could reach 6,000 by the end of 2024 but warns it might drop back down to around 4,800 by mid-2026. Right now, the index is up over 14% on a year-to-date basis, and he expects it to go up another 10% before the end of the year.
However, his official year-end target is lower at 4,750 and suggests a possible 13% drop from where it is now. Bannister also mentions that a correction could happen due to high inflation, a weakening Bitcoin (BTC-USD), and potential changes in the Fed’s approach to interest rates.
Is Bitcoin a Stock Market Predictor?
As already mentioned, Bannister suggests that Bitcoin’s recent weakness might hint at a stock market correction. When looking at historical patterns, he points out that the S&P 500 often stays flat for about six months after Bitcoin hits a peak. In addition, the index actually drops sometimes. Bitcoin has recently fallen to below $64K from a high of $73,157 in March.
Is SPY a Buy Right Now?
Overall, analysts have a Moderate Buy consensus rating on the SPDR S&P 500 ETF Trust (SPY) based on 405 Buys, 91 Holds, and eight Sells assigned in the past three months, as indicated by the graphic below. In addition, the average SPY price target of $601.03 per share implies 10.5% upside potential.
