Banking giant raises price target: how far can the S&P 500 rise this year?

One of the world’s largest banks expects that American stocks have not yet run their course. Bank of America has raised its outlook for the S&P 500 and sees room for further upside over the next twelve months.

The bank bases this on its much-followed Sell Side Indicator, a sentiment meter that historically often warns of major turning points on the stock market.

According to the model, the S&P 500 can rise by about twelve percent in a year. That would amount to a level around 7,800 points. Bank of America therefore remains remarkably positive, despite the fact that sentiment among investors is already relatively high.

Sell ​​Side Indicator remains bullish despite rising optimism

The Sell Side Indicator measures how many stocks Wall Street strategists recommend on average in investment portfolios. In January, this indicator rose slightly and reached the highest level since March last year. That means strategists have become more optimistic about stocks.

At first glance, that sounds like a warning sign. The indicator works contrarian. Historically, stocks perform worst when strategists are extremely bullish and best when they remain cautious.

However, according to Bank of America, that tipping point has not yet been reached. Although optimism has increased, the indicator is still below levels that have historically coincided with major market peaks. As long as that threshold is not exceeded, the signal remains bullish, according to the bank.

Analyst Victoria Roloff therefore states that she currently does not see any classic signals that point to an approaching top in the market. Although strategists’ positioning is approaching more cautious levels, it is not yet in the danger zone.

Corporate profits support confidence on Wall Street

The recent price development seems to confirm that image. The S&P 500 closed higher last month, despite an interim correction due to geopolitical tensions. According to Bank of America, this indicates underlying resilience in the market.

In addition, the fundamentals remain solid. During the current earnings season, there have been no downward revisions to 2026 earnings expectations so far. Analysts are still expecting double-digit growth in corporate profits next year.

Confidence is also evident from statements made by companies themselves. Warnings about weakening demand are less common, indicating that companies are counting on a stable economic environment for the time being. As long as that combination of profit growth and moderate optimism holds, Bank of America sees room for further price increases on the American stock market.