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Investing.com -- The S&P 500 has already surpassed Piper Sandler’s year-end price objective of 6,600, hitting a record high of 6,619, but strategists say the rally may have more room to run.
“Given the strong underlying trends and broadening breadth in this bull market, we suspect the 6,600 level may just be a ‘pit-stop’ before moving higher during Q4,” said Craig Johnson, managing director and chief market technician at Piper Sandler, in a note.
The brokerage firm is keeping its official year-end target unchanged but expects upcoming Federal Reserve rate cuts to underpin further gains and provide opportunities to “buy the dip.”
Support for the S&P 500 now sits at 6,508, 6,480, and 6,391, while resistance levels are marked at 6,648 and 6,803.
The NASDAQ Composite has also been on a tear, closing at a fresh record for the sixth straight day at 22,243. Technology and Communication stocks led the advance, with sector exchange-traded funds (ETFs) XLK and XLC both reaching new highs.
Conversely, Consumer Staples lagged, with the XLP breaking below four-month support.
Markets are gearing up for the Fed’s widely anticipated 25 basis point rate cut on Wednesday. Bond yields eased ahead of the decision, with the 10-year Treasury yield dropping to 4.04%.
Piper Sandler sees the benchmark yield falling further to 3.50% by year-end.
The dollar weakened, falling below 97, while gold and silver each climbed about 1% to record highs of $3,677 and $42.65, respectively, boosting metals and mining shares.
Meanwhile, market breadth indicators have continued to improve despite a recent dip in sentiment. Growth stocks outperformed value, with the Russell 1000 Growth Index hitting a new high.
Piper’s proprietary breadth gauges—26-week New Highs and 40-week Technique—remain supportive of the uptrend, defying the seasonally weak month of September.
“With our proprietary breadth indicators continuing to rise and defying the historical bearish seasonality of September, we believe there is still potential for further gains into year-end, especially for SMID-cap stocks,” Johnson said.