The firm's S&P 500 price target goes to 2,500 from 2,325.
Strong second-quarter earnings, along with falling rates and a weak dollar, will continue to drive stocks higher, according to Jefferies, which raised its year-end price forecast for the S&P 500 on Thursday.
"The bottom line is that equity bull markets don't die of old age," wrote Jefferies Chief Global Equity Strategist Sean Darby in Thursday's note. "They die either from the ill-effects of a credit cycle or from a policy mistake by the central bank tightening inadvertently."
Darby raised the firm's price target to 2,500 from 2,325; the S&P 500 closed Wednesday at 2,478.
Jefferies research notes that despite popular opinion about optimism surrounding Donald Trump's presidency driving U.S. economic gains, global growth is actually the driving force. This is apparent by strong earnings for S&P 500 companies, as companies with the most foreign sales exposure carry equities higher.
"Ironically, the equity market and to some extent the economy have largely been driven by a weak dollar and falling real bond yields rather than a strong dollar and higher bond yields that was assumed when Donald Trump was inaugurated as President," Darby wrote. "Indeed, the fiscal levers have failed to be applied while the corporate tax cuts that the markets had bought into are still a distant dream."
Jefferies said 63 percent of companies the firm tracks have reported earnings above expectations. Of those companies beating earnings forecasts, results are averaging 2.2 percentage points higher than consensus projections. Financials, health care, industrials and technology are the earnings growth leaders, the firm said.