US stocks are expensive and will remain so, Evercore ISI analysts said Sunday, as they expect the S&P 500 to end the year as high as 6,000.
However, as the history of previous “expensive markets” suggests, some of the sharpest gains can occur once equities become expensive, the investment firm added.
“What makes each of the prior “expensive markets” unique is their own trajectory with regard to time, price, earnings and breadth,” analysts said.
“Common to all, valuation alone is not sufficient to sell,” they added.
Evercore attributes this year’s “expensive” market to several factors.
These include “the promise of the AI revolution,” Federal Reserve’s willingness to cut interest rates for the “right” reasons, a relatively short period of market duration and gains, the prospect of a return to earnings growth in 2024, and relatively robust market breadth, even though the “Mag 7” stocks have been doing much of the heavy lifting.
