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The US economy is so strong that even the most bullish Wall Street strategist is underestimating stock returns this year.
That’s according to Jay Hatfield, founder and CEO of Infrastructure Capital Advisors. As he told Yahoo Finance in an interview this week, he sees the S&P 500 going to 5,750. That tops the 5,535 that Wells Fargo’s Chris Harvey predicted this week.
“This US economy is just a juggernaut” fueled by factors like AI, a housing shortage, and relatively cheap natural gas, Hatfield said in an interview this week. “So the US advantages are so profound this is a very unusual cycle.”
The US looks even more impressive when compared with Europe, Hatfield said. With the economy stagnating, the European Central Bank will likely beat the US to cutting rates, followed by the Bank of England, he said. That could put upward pressure on the dollar, which in turn would be deflationary because of its inverse relationship with commodity prices.
“That should give the Fed cover to cut in July even if our economy continues to be strong,” Hatfield said.
And that, in turn, could end up pushing the 10-year Treasury yield as low as 3.25% this year — a call that’s even more out of consensus than Hatfield’s bullish S&P 500 forecast. He thinks it’ll get there because of the downward pressure from global bond markets.
“We project that 2024 will be the Year of Global Rate Cuts,” he recently wrote in a note to investors.
Veteran strategist and economist Ed Yardeni is also bullish, although his target is not quite as lofty as Hatfield’s. He’s sticking with 5,400 as his year-end forecast, he told Yahoo Finance in an interview.
That said, he shares Hatfield’s view that the US economy continues to defy gravity.
“It certainly hasn’t been a hard landing and doesn’t look like a soft landing. It looks like the US economy is flying quite well,” Yardeni said.
If that economic growth continues to fuel earnings, the specific S&P 500 number is more or less irrelevant for most retail investors. The direction is the key — and these strategists agree it’s higher.
Julie Hyman is the co-anchor of Yahoo Finance Live, weekdays 9 a.m.-11 a.m. ET. Follow her on Twitter @juleshyman, and read her other stories.
