Fuguo Securities Raises S&P 500 Target to 7950 Points: US-Iran Ceasefire and Rate Cut Expectations Boost US Stock Sentiment

BlockBeats News, June 17th — In its latest research report, Guotai Junan Securities has raised its year-end target for the S&P 500 index from 7300 points to 7950 points. The institution believes that the easing of US-Iran tensions, a decrease in inflationary pressures, and fully priced-in rate hike expectations are forming a "triple bullish resonance" for the US stock market.

The report points out that with the expected signing of a temporary peace agreement between the US and Iran, and improved expectations for navigation in the Strait of Hormuz, the global energy risk premium has significantly decreased. The fall in oil prices is helping to alleviate US inflationary pressures and improve market expectations for the Fed's policy path.

Guotai Junan Securities' stock strategist Wu Chengquan stated that the current market sentiment has shifted from extreme caution to neutrality. The AI and semiconductor sectors remain core drivers of growth, cyclical stocks are expected to see a rebound after the geopolitical risks recede, and funds may continue to rotate from defensive assets to risk assets.

At the same time, the institution believes that the market has already priced in the policy stance of the new Fed Chair, Kevin Warsh. In the short term, inflation remains a key variable, but the risk of rate hikes is relatively limited.

However, the report also highlights two major downside risks: first, the historical volatility pressure brought about by the US midterm election cycle; and second, the regulatory tightening risk that the AI industry may face, with policy statements potentially disrupting the current core themes driving the US stock market's rise.

Overall, Guotai Junan Securities believes that the US stock market is still in a phase of emotional recovery and structural rally extension, but the risk of increasing volatility is accumulating.