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RBC Capital lifted its year-end target for the S & P 500 as the tech-led market rally continued, seeing double digit gains for 2023. The Wall Street firm’s head of U.S. equity strategy Lori Calvasina raised her S & P 500 forecast for the end of 2023 to 4,250 from 4,100, her prior target dating from 2022. The new target is only about 1% higher than S & P 500’s Friday close if 4,205.45 but it would represent a 10% gain for the year. “We think of our target as where the S & P 500 deserves to be at year-end on December 31st , as opposed to a high-water mark during the year,” Calvasina said. .SPX YTD mountain S & P 500 RBC’s new target stands above the average year-end forecast of 4,157 from Wall Street strategists, according to CNBC Pro’s market strategist survey , which rounds up the top 15 strategists’ predictions. Calvasina said RBC employed six different models to determine the price target — economic, sentiment, valuation/earnings, political and cross asset. One of the reasons for the higher target is its new election cycle test, which bakes in the average S & P 500 return of 16.3% in third years of a presidential cycle. “We decided to make this switch based on some interesting trends we are seeing in polling and betting market data, which we think have gone unnoticed because of all the focus on the debt ceiling recently,” Calvasina said. In terms of positioning, RBC believes that there’s growing risk that large-cap growth stocks’ massive run could be near its end. The firm said it’s worth looking at cheap small caps right now. “We are prepared for Large Cap Growth leadership to pause and are selectively adding to Value sectors like Energy,” Calvasina said. “Small Caps are at an attractive entry point for patient investors.” The strategist pointed out that the Russell 2000 is now “deeply undervalued,” with its price-to-earnings ratio at 13.8 times, well below average. Additionally, Calvasina said periods of economic stress are usually good buying opportunities for small caps as the cohort tends to underperform heading into a recession and starts to outperform mid-way through a downturn. — CNBC’s Michael Bloom contributed reporting.