The S&P 500 is up slightly as investors refocus on bank earnings. Early indications points to an upbeat quarter even as the number of coronavirus cases in the US rise. Meanwhile, industry experts expect the S&P 500 index to test $3,350 in the next 12 months.
Analysts predict the S&P 500 will test $3350
According to FactSet, industry analysts believe that the S&P 500 rally will continue. They believe that the index will reach $3350 in the next 13 months, which is a 6% gain from the current price. The data company calculated this by calculating the difference between the bottom-up target price and the closing price as at Friday last week.
This growth will be driven by the energy and financial sectors, which have been among the worst performing in the past few months. They will be followed by healthcare, utilities, and consumer staples.
On the other hand, the only laggards, according to analysts will be consumer discretionary and information technology. Tech has been the best-performing sector in Wall Street.
But should industry analysts be trusted? According to Factset, they have overestimated the price of the index by about 3.6% in the past five years.
Bank earnings stream in
The biggest mover in the S&P 500 today is corporate earnings. Already, JP Morgan has released better than estimated earnings. The company made more than $32.98 billion in revenue, up by 14.7% year-over-year. That was higher than the estimates by more than $2.75 billion.
The company added more than $8.8 billion to its reserve build. Also, the EPS came in at $1.83 while the loss came in at $1.87. It’s closely watched FICC revenue rose by 99% to $7.3 billion while its CET1 ratio rose from 11.5% to 12.4%.
In a statement, Jamie Dimon said:
“We earned $4.7B of net income in the second quarter despite building $8.9B of credit reserves because we generated our highest quarterly revenue ever, which demonstrates the benefit of our diversified global business model.”
S&P 500 technical outlook
S&P 500 futures are trading at $3171, which is slightly below yesterday’s high of $3,234. On the daily chart, the price is above the 50-day and 100-day EMAs. The price is slightly above the 23.6% Fibonacci retracement level and above the ascending pink trend line.
It is also forming an ascending triangle pattern. Therefore, the index is likely to continue rising as bulls target the next support at $3300. On the flip side, a break below $3115 will invalidate the trend. This price is along the lowest level on Friday and Thursday and the ascending trend line.