S&P 500 Has Survived Wars, Recessions And Bubbles: BNY Says 'Resilience Is A Historical Trend' Amid Iran Jitters

The Bank of New York Mellon said in a post on its website published Wednesday that the S&P 500’s performance is defined by resilience rather than continuous gains.

• The bank said that over the decades, the S&P 500 has endured recessions, wars, inflation, political division, corrections, and bubbles, yet has maintained an upward trajectory over the long term.
• Further, the bank advised that instead of being swayed by short-term market swings, investors should focus on the long term. 
• The bank has a base-case 12-month target on the benchmark index of 7,300.

The Bank of New York Mellon Corp. (BNY) has expressed confidence in U.S. markets, noting that the S&P 500’s performance since its launch in 1926 has been marked by strong resilience.

In a post published on its website, the bank said, “Over the decades, it (S&P 500) has endured recessions, wars, inflation, political division, corrections and bubbles — yet its long-term trajectory has remained upward.”

“Its history is defined not by continuous gains, but by resilience: the capacity to absorb shocks and recover over time,” the bank added.

BNY Advises ‘Long-Term Mindset’ In Investing

The post comes shortly after the U.S. celebrated its 250th Independence Day over the weekend. BNY compared the benchmark index’s performance with the country, noting, “Like the market, the country’s history has never been smooth or free of conflict. Yet the broader American story is also one of endurance and long-term progress.”

Further, the bank advised that instead of being swayed by short-term market swings, investors should focus on the long term. “We believe the message is simple: wealth building is a long-term mindset. Setbacks are inevitable, but history suggests that staying patient, disciplined and invested matters far more than trying to time every rise and fall of the market,” it said.

BNY’s S&P 500 Target

The bank has a base-case 12-month target on the benchmark index of 7,300. “Momentum in global activity continues and the uncertainty from the Iran conflict fades gradually. Fiscal loosening continues to be a tailwind and labor market conditions improve. Financial conditions loosen,” the bank predicted in its Global Economics & Markets Outlook published in May.

BNY has also said that, in the event of a recovery, which it assigns a 20% probability, the S&P 500 could reach 7,700, while a stagnation scenario, with a 30% probability, would result in the benchmark index at 5,700.

BNY’s targets are conservative compared to other Wall Street estimates. Citi has raised its year-end S&P 500 target to 8,100, while UBS has a target of 7,900. Bank of America, however, has said that it sees “too many red flags” in U.S. stocks and has a year-end target for the index at 7,100.

S&P 500: What Does Retail Think?

On Stocktwits, retail sentiment around the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, slipped from ‘extremely bullish’ to ‘bullish’ over the past 24 hours.

In a Stocktwits poll that sought to understand how investors are reacting to the fresh Iran war escalations and a pullback in stocks, a majority of the 15,200 users polled said they were buying the dip. About 26% said they were already fully invested, while 20% said they were eyeing more downside before investing further.

Meanwhile, the Vanguard S&P 500 ETF (VOO) has seen sentiment remain ‘bearish’ over the past 24 hours, while the iShares Core S&P 500 ETF (IVV) has improved from ‘bearish’ to ‘neutral’ over the same period.

The S&P 500 has gained about 9% so far this year and closed at 7,482.71 on Wednesday. Meanwhile, the Dow Jones Industrial Average has gained about 8% in the same time and the tech-heavy Nasdaq Composite has been the best-performing among the benchmark indexes, gaining more than 11%.

Retail sentiment around the Invesco QQQ Trust (QQQ), and the SPDR Dow Jones Industrial Average ETF Trust (DIA) was ‘bullish’ at the time of writing.

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