The high-water mark for stock projections in 2024 has once again moved up.

In a note to clients on Monday, Wells Fargo's head of equity strategy, Christopher Harvey, boosted his year-end target for the S&P 500 (^GSPC) to 5,535 from 4,625. This marks the highest call for the S&P 500 by year-end among strategists tracked by Yahoo Finance and reflects about 6% upside from where the benchmark average opened on Monday.

Harvey believes the current market moment has investors looking past the possibility that stock valuations have risen too high amid the market rally, providing further room for stocks to move higher.

"The bull market, AI's secular growth story, and index concentration have shifted investors' attention away from traditional relative valuation measures and toward longer-term growth and discounting metrics," Harvey wrote. "Investors' valuation thresholds have decreased and time horizons have appeared to have increased since 2023 as a result of this secular optimism."

Harvey is the latest in a string of strategists boosting their projections for the S&P 500 this year as they aim to keep pace with a hot start for stocks in 2024. He noted that US economic growth has come in better than expected since his team published its 2024 outlook in November, a positive sign for corporate growth.

But given the S&P 500's roughly 9% rise this year without a significant pullback, Harvey and other strategists note that the index's next leg higher likely won't come as swiftly for investors.

Early signs of this have emerged in the last week as stocks fell, the 10-year Treasury yield (^TNX) hit its highest level since November, and the CBOE volatility index (^VIX) saw its largest weekly increase in more than six months.

"We believe equities have some upside from here, but still anticipate a volatility spike in [the first half of 2024] while a [second half of 2024] 'melt-up' appears increasingly likely, partly driven by political outcomes that support greater M&A and partly by an anticipated multi-year easing cycle that supports risk-taking," Harvey wrote.

Harvey noted there are several key risks to his base case. One would be a resurgence in inflation that would change the Fed's current forecast to reduce interest rates in 2024 and 2025. Another would be elevated bond yields, with the 10-year Treasury yield holding at 5% or higher for six months considered a key headwind.

While bond yields have recently spiked, the yield on the 10-year hovered around 4.43% on Monday, well off the 5% levels Harvey flagged as a point of concern.