Wall Street firm Jefferies Financial Group (JEF) has raised its year-end target for the benchmark S&P 500 index to 6,600, citing robust corporate earnings and an improving outlook for the American economy.
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Previously, the brokerage’s target for the S&P 500 this year was 5,600. Jefferies had been the only firm on Wall Street to forecast that the index would end the year below the 6,000 level. Several other banks and brokerages have also recently lifted their forecasts for the S&P 500 due to strong corporate earnings, including UBS (UBS) and Citigroup (C).
In a note to clients, Jefferies said that AI-related companies and mega-cap technology stocks such as Nvidia (NVDA) and Microsoft (MSFT) should continue to lead market gains in this year’s second half. At the same time, strong corporate earnings and robust financials suggest a resilient macroeconomic backdrop for U.S. markets.
Big Bounce
Jefferies also noted the big bounce in U.S. equities following the sharp downturn seen in April when U.S. President Donald Trump announced retaliatory tariffs. The firm said that much of the rebound in U.S. stocks has come from the confidence investors have gained from strong corporate earnings for this year’s second quarter and first half of the year.
Of the 474 S&P 500 companies that have reported second-quarter financial results, 80% beat analysts’ earnings estimates, according to data from LSEG (GB:LSEG), above the historic average of 67%. Jefferies also reaffirmed its forecast for three interest rate cuts from the U.S. Federal Reserve this year, starting in September.
The next test of the U.S. market will come when chipmaker Nvidia reports its latest financial results on Aug. 27.
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The SPDR S&P 500 exchange-traded fund (SPY) currently has a consensus Moderate Buy rating among 504 Wall Street analysts. That rating is based on 419 Buy, 79 Hold, and six Sell recommendations issued in the last three months. The average SPY price target of $716.75 implies 11.25% upside from current levels.
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