Credit Suisse just raised its year-end forecast for the S&P 500 and told investors to "stick with equities."
In a note published Friday, its head of global equity said "the bull market will continue" because interest rates will remain low, earnings will come in stronger than expected and the normal signs of a peak in the credit cycle are simply not there.
The analyst, Andrew Garthwaite, said that perhaps the most important factor of the current bull market is a slowdown in wage growth.
"The critical issue is that the acceleration in U.S. wage growth that had been evident has slowed down," he said. He went on to say the labor force is "unlikely" to command more pricing power until other, tighter labor markets like the United Kingdom or Japan experience acceleration in wage growth.
Credit Suisse has raised its year-end 2017 target for the S&P 500 to 2,550 from 2,500 and introduced a midyear 2018 target of 2,600. The S&P 500 closed at a record 2,447.83 on Thursday. The index has had a return of 10.53 percent this year.
Explaining partly the slow growth of wages, Garthwaite pointed to the rise of "flexible employment," sometimes called the gig economy, saying more part-time work causes the unemployment rate to underestimate the spare capacity in the labor market.
According to the note, nearly half of the net jobs created since 2010 in the United Kingdom have been part time or self-employed.
"Until we see clear signs of accelerating wage growth in either the UK, US states with very low unemployment rates, or the Japanese construction industry, then we probably will not see it occur overall in the US," the note read.
Further supporting the case for equities and bullish growth is a "slow" acceleration in global GDP growth and continued supportive financial and monetary conditions, Garthwaite said.
The note also said earnings revisions and "reasonable" earnings upside make the case for equities.