Wall Street’s high mark for stock market returns in 2024 keeps moving up.

BMO Capital Markets chief investment strategist Brian Belski boosted his year-end price target for the S&P 500 (^GSPC) to 5,600 from 5,100 in a research note on Wednesday, noting that momentum in the market is “likely to persist.” Belski’s 5,600 target reflects about 7% upside from Monday’s close.

“We are comfortable with this because we believe the market is behaving in a similar fashion to 2021 and 2023 — years where we did not give enough credit to the strength of market momentum, something we are trying to avoid this time around,” Belski wrote in a research note.

Belski is the latest in a string of Wall Street strategists to chase the 2024 stock market rally higher with boosted year-end targets. The high-water mark on the Street entering the year was 5,200, with the median strategist target at 4,850.

But earnings have grown more than analysts have expected this year and US economic growth has largely surprised to the upside. Ten of the 15 strategists tracked by Yahoo Finance are now at or above 5,200 on year-end targets.

The chug higher in stocks has come as investors have aggressively repriced their expectations for Federal Reserve interest rate cuts this year. After signs emerged that inflation isn’t declining as quickly as economists hoped, investors are now pricing in roughly two interest rate cuts this year, down from a peak of nearly seven in early January, per Bloomberg data.

This is in line with the Fed’s most recent Summary of Economic Projections (SEP), which showed that most officials saw the central bank cutting interest rates either two or three times this year.

“It has become clear to us that we underestimated the strength of the market momentum, particularly considering that investor expectations and Fed policy guidance have become essentially aligned vs. the significant disconnect that existed at the beginning of the year,” Belski wrote.

Charging Bull bronze sculpture in the Financial District of Manhattan, New York, United States, on October 23, 2022. The sculpture was created by Italian artist Arturo Di Modica in the wake of the 1987 Black Monday stock market crash.  (Photo by Beata Zawrzel/NurPhoto via Getty Images)

Charging Bull bronze sculpture in the Financial District of Manhattan, New York, United States, on October 23, 2022. The sculpture was created by Italian artist Arturo Di Modica in the wake of the 1987 Black Monday stock market crash. (Beata Zawrzel/NurPhoto via Getty Images) (NurPhoto via Getty Images)

He acknowledges there will be bumps along the way for stocks. Using historical analysis, Belski believes that the market likely hasn’t seen its worst drawdown of the year yet. Belski’s work shows the average pullback during the second year of a bull market is 9.4%. April’s recent pullback only reached just over 5%.

But given the index’s rally off the April lows, Belski is “now convinced that should a more severe pullback happen, it will likely occur at higher index levels than we previously anticipated,” providing a higher landing spot for the S&P 500 after a rebound.

And with the level of strength seen in stocks to start the year, history says further gains are likely ahead. In years where the S&P 500 rallies more than 8% in the first five months of the year, as it’s currently pacing to do, the index gains more than 7% to finish the year 70% of the time, per Belski.

“Based on historical trends, performance this strong to start the year tends to continue through year end,” Belski wrote.

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

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