Stock market professionals have a hard time imagining a fall in the S&P 500 in 2021

No equity market analyst that MarketWatch surveyed for this report predicts a setback from current levels, already seen as high by more than a few market experts as investors head into a crucial phase of the recovery from the worst pandemic in more than a century and a new presidential regime under President-elect Joe Biden, who takes the oath of office on January 20th.

Despite the irritating fears that valuations and, in particular, stocks for large-cap technology companies, have a perfect price, with some companies, such as Tesla Inc. TSLA,
+ 2.44%,
representing a paradigm of Wall Street anxieties about market bubbles, many see that stocks will only go in one direction next year: toward the sky.

Read: The stock market is rich, but may be at a “much more reasonable level of valuation than traditional measures suggest”

Analysts believe that the bullish stock market is running out and instead offer estimates of earnings at the end of 2021 and in some cases project attractive concentrations for the market in the next 12 months.

JPMorgan Chase’s Dubravko Lakos-Bujas offers arguably one of the most challenging gravity forecasts for the S&P 500 at 4,400, which would represent an impressive 19% increase in the benchmark.

To put it in perspective, the S&P 500 SPX,
+ 0.35%
has already recorded a 15% gain in 2020, the DJIA Dow Jones Industrial Average,
+ 0.23%
is heading for a 6% increase during the current date, while the Nasdaq COMP Composite Index
+ 0.26%
is on track to earn 43% by 2020. And not even start with the mind-boggling gains achieved by the major benchmark indices of March 23 of the year.

And it’s not just bulls like Dubravko Lakos-Bujas and the handful of other strategists MarketWatch asked this year, the equity analyst community as a whole has trouble figuring out a world in which the S&P 500 will end next. year.

S&P 500 Analysts’ targets for the end of 2021

Analyst	Affiliation	Goal 2021
Dubravko Lakos-Bujas	JPMorgan Chase	4,400
Kristina Hooper	Invesco	4,350
David Kostin	Goldman Sachs	4,300
John Stoltzfus	Oppenheimer	4,300
Brian Belski	BMO	4,200
Keith Parker	UBS	4,100
Maneesh Deshpande	Barclays	4,000
Julian Emanuel	BTIG	4,000
Sam Stovall	CFRA	4,080
Binky Chadha	Deutsche Bank	3,950
Mike Wilson	Morgan Stanley	3,900
Darrel Cronk	Wells Fargo Investment Institute	3,900
Tobias Levkovich	Citigroup	3,800
Savita Subramanian	BofA	3,800
Barry Bannister	Stifel	3,800 (for spring / summer)

According to FactSet data, as of Thursday, the average year-end price target for the S&P 500 index in 2021 is 4,027.21, which represents a 9% increase over the closing level from the broad market index to the reduced holiday week. past.

Perhaps it is difficult to regain the almost unbridled enthusiasm for what awaits us in 2021 after a year marked by an immeasurable tragedy of the COVID-19 pandemic.

Overall, the United States has reported a total of 18,495,851 cases and 326,871 deaths, as of noon Thursday, according to data from Johns Hopkins University. In addition, more than 22 million people lost their jobs during the worst epidemic in the United States and put the economy on its knees.

Kristina Hooper, who holds one of the bloodiest prospects in the 2021 market, said progress in the deployment of COVID vaccines and remedies has encouraged bulls, and that the federal reserve for all past and future purchases is the Federal Reserve. , which has promised to keep interest rates close to 0% until at least 2023 and continue to buy bonds and monetize US federal debt.

“I expect a lot of gains to occur during the first half of 2021, discounting strong economic expansion once the vaccines are widely distributed,” Hooper told MarketWatch Thursday afternoon via email. “I also expect the Fed to remain extremely accommodating, which should support risky assets, especially equities,” he said.

CFRA’s Sam Stovall, whose target was the S&P 500 2021 for 2021, approaching the mid-range FactSet, offers a relatively solid valuation of the 4,080 equity outlook.

Stovall told MarketWatch that “optimism abounds,” referring to his 2021 research outlook report, and says the goal is justified by the Fed’s expected easy money policies and hope for more help. government prosecutor to maintain fragile economic recovery on rails viral outbreak on ropes.

“As we approach the dawn of 2021, optimism abounds,” he wrote. “At the beginning of the new year, a new administration will be installed, with the possibility of a unified Congress supporting it, offering the possibility of an additional fiscal stimulus, together with the Federal Reserve that has promised to do so.” whatever it takes, ”he said. , referring to the now famous promise of former European Central Bank President Mario Draghi in 2012 to preserve the euro at the height of the eurozone debt crisis.

Julian Emanuel and Michael Chu of BTIG say that next year will represent an epic “redistribution of wealth”, where small capitalization stocks can surpass larger capitalizations and value increases growth annually, achieving a long fallow period of years for undervalued stocks. This dynamic is likely to bring out the wider market, according to the pair’s forecast.

BTIG explains it like this:

However, it’s worth noting that equity analysts weren’t even close to the mark in their 2020 projections, assuming the S&P 500 will maintain its current levels through the abbreviated holiday trade of the week. next.

Craig Johnson of Piper Jaffray approached the current 3,700 range of the S&P 500, with an initial goal to end the year at 3,600, according to Chris Matthews of MarketWatch.

To be fair, a pandemic is hard to predict and few, if any, would have been able to properly measure how the market would react to the public health crisis before the end of March. Surely there are some market participants hiding suggesting that the market lows test is still close, as they did here in April and here in May.

However, as MarketWatch columnist Mark Hulbert says, stock forecasts “are not investment roadmaps,” adding that they are primarily marketing documents for fund management companies.

Bespoke Investment Group offers its own perspective of the stock market forecasts with more candida:

“We do not intend to know where S&P will be listed in twelve months. Wall Street strategists’ goals are almost always wrong in their predictions, “BIG writes in its 2021 outlook report.

“The whole set of strategies that provide year-end goals every year reminds us of Charlie Brown trying to throw a football. Time and time again he tries to do well, but every time, Lucy has other plans.”

Next week

Looking to the future, there is little in the US economic calendar in the last week of 2020, which will also be abbreviated as much of the world observes New Year’s Eve on Friday.

Tuesday, investors will be watching the S&P Case-Shiller house price index for October at 9 a.m., Eastern Time, Wednesday will see a report on early trade in goods at 8:30 p.m., a reading of Chicago area manufacturing activity at 9:45 a.m. and pending home sales at 10:00 p.m.

The last day of the week and the following year Thursday concludes with a report on weekly unemployment claims at 8:30 p.m.