Are we REALLY entering a ‘stock pickers paradise’? Bank of America issues optimistic research note claiming stock market will reach record highs next year – but not all experts agree

Strategists at Bank of America predict that stocks will reach record levels next year.

Savita Subramanian, head of the bank’s U.S. equity and quantitative strategy department, wrote in a note on Tuesday that she sees the S&P 500 index ending at 5,000 in 2024.

That would be a record high for the market index, which tracks the stock performance of 500 of the largest companies in the U.S., including Amazon, Apple, Tesla and Walmart.

It would also be 10 percent higher than Monday’s closing price of 4,547.

The bank joins a chorus of optimistic Wall Street forecasters, saying that “the market has already absorbed significant geopolitical shocks.” But others are much less optimistic. One market prophet predicted last week that stock prices could fall by as much as 30 percent.

The market has been booming lately – buoyed by gains in the ‘Magnificent Seven’ tech stocks Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla.

The S&P 500 is up 18 percent this year as confidence grows that the Federal Reserve will soon end its aggressive interest rate hike campaign.

The increases have pushed interest rates from a low of 0.5 percent in April 2020 to a 22-year high of between 5.25 and 5.5 percent today.

The Fed kept interest rates steady at its last meeting earlier this month. This was the third time in seven policy meetings this year that the central bank has not raised interest rates.

Subramanian said her team is ‘bullish’ on US stocks for next year, ‘not because we expect the Fed to cut spending, but because of what the Fed has achieved.’

The U.S. Securities and Exchange Commission defines a “bull” market as a time when stock prices are rising and market sentiment is optimistic.

Share prices rose immediately after news last week that annual inflation had fallen slightly to 3.2 percent.

The Federal Reserve announced at its latest meeting earlier this month that interest rates will remain at current levels of between 5.25 and 5.5 percent

Share prices rose immediately after news last week that annual inflation had fallen slightly to 3.2 percent

Subramanian predicts that the S&P 500 will reach 4,600 by the end of this year – about 1 percent from current levels.

She said she expects a “stock picker’s paradise” next year as certain companies separate themselves from the rest.

“Businesses have adjusted (as they are wont to do) to higher rates and inflation,” she wrote.

Cyclical stocks – which are known for following the cycles of an economy through expansion, peaks, recessions and recoveries – are the best bet for next year, according to the strategist.

She also added that she is optimistic about the market heading into 2024 because election years “tend to be positive for stocks.”

It comes amid a mixed outlook for the US economy. Wall Street “prophet” Gary Schilling, who predicted the 2008 housing crisis, said last week that stocks were likely to fall to their lowest levels since the pandemic, adding that a recession was imminent.

And last week, investors were spooked by the emergence of the dreaded “death cross” technical pattern on the Dow Jones Industrial Average index.

A death cross occurs when an index’s 50-day moving average falls below its 200-day average, indicating momentum is weakening. A moving average is the average price range of an asset over a given period of time.

The pattern effectively tells investors that prices have deteriorated in a short period of time. The sign has appeared before several major crashes, including in 2008 and 1929. The last time it appeared was March 2022, when markets plunged 12 percent in six months.

But Todd Walsh, chief technical analyst at Alpha Cubed Investments, told DailyMail.com that the death cross appears to be touch-and-go, and a small part of a bigger picture.