Bank of America: Corporate resilience is the driving force, the S&P 500 target is as high as 6,600 points

The Zhitong Finance App learned that against the backdrop of the American business community showing amazing resilience, the Bank of America strategist team drastically raised their outlook for US stocks. The bank pointed out that despite facing the impact of Trump's chaotic trade policies, US companies can still maintain the level of profit guidance.

A team of strategists, including Savita Subramanian and Jill Carey Hall, raised the S&P 500 year-end target from 5,600 points to 6,300 points and set a 12-month target price of 6,600 points. As of Tuesday's close, the index was at 6225.52.

They added that despite the mediocre performance of the US economy, US companies are unique, and corporate profit forecasts remain stable, which provides an important reference basis for stock investors.

The strategist wrote in a report released on Tuesday: “Despite the tentative trade agreement, the introduction of the “Big and Beautiful” Act, and recession risks have subsided, policy uncertainty is still close to a historical peak, and treasury bond yields have been at a high level for decades. However, corporate transparency has never been affected.”

The new year-end target means that there is still 1.2% upside compared to Tuesday's closing price. Previously, Goldman Sachs strategists had also raised their year-end and 12-month target prices.

Subramanian and Hall said that most companies are still issuing profit guidelines, and specifically pointed out that the dispersion of earnings per share (a measure of profit uncertainty) is close to its low during the pandemic. The second-quarter earnings season will officially kick off this week.

“Exchange rate fluctuations, inflation, and interest rate changes have failed to shake the profit margins of S&P 500 stocks since the COVID-19 pandemic — companies either successfully adapted or were removed from the index,” the strategist analyzed.

The S&P 500 index has continued to rise since Trump suspended implementation of the strictest tariff proposal on April 9, recording its best quarterly performance since 2023. Currently, it is only one step away from its all-time high.

Subramanian and Hall said they believe the short-term outlook for the S&P 500 is “tending to be flat” in light of recent gains. Two strategists said it was difficult to find a positive catalyst to keep the benchmark index “surging” in the third quarter.

However, strategists pointed out that in the medium to long term, the benchmark index still has a “warm” appeal compared to bonds, and can even be called “hot.” After falling back in June, long-term yields are now once again reaching recent highs.

Subramanian and Hall concluded, “An aging population and stubborn inflation together form a supply-demand logic to counter inflationary income. Stocks clearly have an advantage over bonds in this environment.”