Equities have more room to run as blue chips make all-time highs, Piper Sandler says

With the major equity indexes hovering around all-time highs, analysts at Piper Sandler believe stocks have “more room to run into year-end.” This, they believe, could push the S&P 500 toward their 2024 price target of 5,800.

The Dow Jones Industrial Average (DJIA) hit a new record high of 41,733 on Monday before closing slightly lower at 41,622. Last week, the index found support around the 40,000 mark and its 50-day moving average, rallying for four consecutive sessions.

SMID-cap indices also showed strength, bouncing from their 200-day moving averages and reclaiming their 50-day levels.

The S&P 500 rose for the sixth straight session, nearing its all-time high at 5,670, while the Nasdaq lagged, falling 0.50%, with technology stocks under pressure. Apple shares dropped 2.8% to a multi-week low, and semiconductors slipped 1.3% after last week’s gains.

Looking ahead to this week, investors are focusing on upcoming central bank rate decisions and sales data.

The Federal Reserve is expected to cut rates by at least 25 basis points on Wednesday, though there is still debate over a potential 50 basis point cut. Piper Sandler expects increased volatility over the week as investors react to the Fed’s rate cuts and evaluate whether the economy is on track for a soft landing.

Meanwhile, the 10-year bond yield continued to fall, reaching a new 52-week low of 3.62%.

“We believe that 3.25%-3.00% is the key support area to watch for U.S 10-year bond yields in the coming months,” analysts pointed out.

“A break below that level would elevate deflation fears and likely spur the Fed to quicken its pace of rate cuts, which would likely spook equity markets.”