Jefferies (JEF) has flipped bullish on the S&P 500 (SPY), lifting its year-end target from 5,600 to 6,600. The bank pointed to what it called “resilient earnings” in the second quarter, saying corporate America is holding up far better than expected. For investors, the upgrade is a clear signal that the rally still has room to run.
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Jefferies now joins a growing list of brokerages pushing targets higher as profits roll in. After months of calling the market too expensive, they have thrown in the towel and acknowledged the strength of the earnings cycle.
Markets React with Optimism
This upgrade comes on the heels of Powell’s Jackson Hole speech, which already had traders betting on September rate cuts. Jefferies then gave them another reason to buy. Tech stocks, which carried the market for much of the year, led the push higher once again. The S&P 500 has already surged to new records, and this call suggests there is still another 2% to go.
Wall Street’s reaction shows us just how powerful earnings remain in influencing the outlook. Companies are not only beating expectations, they are also showing guidance that reassures investors about the rest of the year.
Fed Rate Cuts Could Push Stocks Further
Jefferies is also counting on monetary policy to do its part. They are projecting three rate cuts starting in September, a path that would ease financial conditions and fuel more upside for equities. With Powell hinting that risks to growth now matter as much as inflation, investors are betting the Fed finally moves.
If those cuts arrive on schedule, the earnings story gets even stronger. Lower borrowing costs would support valuations, help companies manage debt, and extend the rally in sectors sensitive to rates.
Other Banks Join the Bullish Shift
Jefferies is not alone. UBS (UBS) also raised its S&P 500 target to 6,600 just days earlier, citing similar reasons. Analysts across the Street are now building their cases on the same mix of solid earnings and an easier Fed. After months of cautious calls, it feels like momentum has shifted decisively.
But that doesn’t mean risks have vanished. Any setback in inflation data or an unexpectedly strong jobs report could slow the Fed’s hand. Traders know that, which is why the optimism is tempered by caution.
What Comes Next for the Market
For now, earnings are proving to be the anchor of the bull case. With corporate profits rising and interest rates expected to fall, the math favors equities. Jefferies’ call for 6,600 is a reflection of how much confidence has returned to Wall Street.
The next test comes with data in September. If the Fed delivers the cuts and companies keep showing strong results, the market may have the fuel it needs to climb even higher.
At the time of writing, the S&P 500 is sitting at $6,466.91.
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