With the S&P 500 Index setting all-time highs, BMO Capital Markets is predicting even more gains through the end of 2024.

Brian Belski, the firm’s chief investment strategist, lifted his year-end forecast on the U.S. equity benchmark to 5,600, the highest among Wall Street soothsayers tracked by Bloomberg — and roughly seven per cent above Tuesday’s closing level. The upgrade comes just two months shy of Belski reiterating his call for a drop to 5,100 on concern that the stock market had run up too far, too fast.

“It has become clear to us that we underestimated the strength of the market momentum,” he admitted Wednesday in a note to clients. Investor expectations and Federal Reserve policy guidance finally coming into alignment — erasing the disconnect from the start of the year when traders were pricing in up to seven interest rate cuts in 2024 — is also a positive for the market, he added.

The S&P 500 eclipsed its previous closing record on Wednesday after the latest consumer price index reading cooled in April for the first time in six months, reigniting optimism around policy easing later this year. Strong corporate earnings readouts from U.S. firms this reporting season have also helped the index rebound after a pullback in April. Historical patterns signal continued gains, according to Belski.

BMO’s chief investment strategist was among one of the few forecasters to correctly predict last year’s equity rally as some of Wall Street’s most closely-watched prognosticators called for a downturn.

In the beginning of 2024, U.S. stock forecasters had done a 180, with many of those who called for losses last year quickly ratcheting up their S&P targets as those who were correctly optimistic in 2023 turned conservative in their expectations. But continued market strength is leaving most forecasts in the dust.

Still, Belski anticipates a “significant pullback at some point,” just from a higher level than previously expected. BMO left its earnings per share projections unchanged at US$250, stating that fundamental and macroeconomic underpinnings of the rally remain the same as momentum is the key driver.

The average year-end target price on the S&P 500 currently is around 5,087, nearly four per cent below its current level, which has also blown past calls from Goldman Sachs Group Inc., Deutsche Bank AG, Citigroup Inc. and other Wall Street giants. Goldman’s top strategist David Kostin told Bloomberg Television on Tuesday that there was no more room for gains this year, given already high valuations.

“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 said.