Wall Street Bull vs Bear: Stifel predicts S&P 500 could plummet 14%, while Trivariate optimistically forecasts it will surge to 7,000 points within two years

According to the Zhitong Finance APP, as U.S. stocks continue to rebound and the S&P 500 index briefly breaks through 6,400 points, there is a significant divergence in Wall Street's judgment on future trends.

Stifel Chief Equity Strategist: Beware of Overvaluation and Stagflation Risks

Barry Bannister, the Chief Equity Strategist at Stifel, who accurately warned of the sell-off at the beginning of the year, issued another warning on Monday. He stated that the current high valuations are reminiscent of the Wall Street frenzy at the end of the 1990s, with the "seven giants" tech stocks leading the way and an active IPO market. However, against a backdrop of stagflation, the U.S. economy may suddenly slow down in the second half of the year, triggering a sell-off, and the S&P 500 could fall back to 5,500 points.

Bannister pointed out that the current AI capital expenditure boom and the advance procurement spending made earlier this year to avoid tariffs are insufficient to support the economy in the long term. He emphasized that the current price-to-earnings ratio of the S&P 500 has reached 24 times, significantly higher than the five-year average of 22 times. "The valuation issue will not manifest immediately, but once it erupts, it often leads to crashes like those in 1929, 2000, and 2022."

In terms of investment strategy, he recommends increasing allocation to defensive value sectors, such as consumer staples and healthcare, specifically naming Philip Morris (PM.US), Altria (MO.US), Mondelez (MDLZ.US), General Mills (GIS.US), Abbott (ABT.US), Stryker (SYK.US), Boston Scientific (BSX.US), and GE Healthcare Technologies (GEHC.US).

Bank of America Survey: 90% of Investors Believe U.S. Stocks Are Overvalued

The latest Bank of America global fund manager survey shows that in August, 91% of investors believe U.S. stock valuations are too high, the highest level in over a decade. However, at the same time, the proportion of investors' allocation to U.S. stocks has increased, narrowing from a net reduction of 23% in July to a net reduction of 16%.

The survey also reveals complex market sentiment: only 5% of respondents expect a "hard landing" for the U.S. economy, and cash holdings remain low at 3.9%; concerns about an "AI stock bubble" have risen, with 41% of investors agreeing, and 14% listing it as a primary risk. Additionally, investor interest in emerging markets is heating up, with a net increase in allocation reaching 37%, the highest since February 2023, attributed to a nearly 10% depreciation of the dollar and improved expectations for the Chinese economy.

Trivariate Research: S&P 500 to Reach 7,000 Points in Two Years

In stark contrast to Bannister's caution, Adam Parker, founder of Trivariate Research, predicts that the S&P 500 will rise to 7,000 points by the end of 2026, representing about a 9.6% upside from current levels. He believes that profit growth in the banking sector and productivity gains from AI will drive corporate profits to grow by 10% in 2026, particularly in the financial and healthcare sectors.

Parker is optimistic about First Capital Credit (COF.US) becoming the largest credit card issuer in the U.S. after acquiring Discover, as well as diversified financial institutions like Morgan Stanley, Goldman Sachs, and JP Morgan In healthcare, he recommends McKesson (MCK.US), Cardinal Health (CAH.US), and Cencora (COR.US), believing that the sector is expected to significantly improve operational efficiency with the empowerment of AI