Wall Street is coalescing on a single S&P 500 target. The power of round numbers is irresistible.
By Steve Goldstein
Wall Street just loves this number.
Tom Lee, the head of research at Fundstrat, just lifted his year-end S&P 500 target to 8,000, from 7,700 previously.
It's not a particularly remarkable change and it was made for a pretty understandable reason: earnings expectations have improved. Goldman Sachs, Morgan Stanley and Deutsche Bank each have landed on that same number - 8,000 - as their year-end forecast for the S&P 500 SPX. Societe Generale also has moved its year-end target to - you guessed it - 8,000.
It would represent a 17% increase from 2025 levels and a 9% increase from Wednesday's close.
The notable element here is the round number. Wall Street, and Main Street, love them.
One study, from Adam Bloomfield, Alycia China and Adam Craig, looked at 20 million accounts and 134 million transactions, and found integer trades are nearly four times more likely than expected and round-number trades are 6.7% more likely than expected. (Young men in particular like their round numbers, the study found.)
Another study found excessive pressure around a rounded stock-price threshold.
Corporate America has a round-number fetish as well, a UCLA study of 11,328 deals finds, and researchers there conclude its use ends up being a signal of impatience. Researchers also have found irregular patterns in the distribution of gross-margin percentages, again in favor of round or neatly-divisible numbers.
Central banks have settled on the same round-number inflation target - 2% - across the entire developed world. (Canada and New Zealand technically have a 1% to 3% range.)
It's not just Wall Street, either: a working paper last year, studying a large online auction platform in the Netherlands, came away with an estimate that 21% of bidders are prone to round-number bias.
-Steve Goldstein
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(END) Dow Jones Newswires
06-25-26 0744ET
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