More stock market records expected as coronavirus recovery continues in 2021

The S&P 500 is on track for more record highs in 2021, as a COVID-19 vaccine fuels a reopening of the global economy, Wall Street analysts say.

The size of the expected gains varies across Wall Street, with Bank of America seeing a 1.8% increase, Morgan Stanley forecasting a 4.5% return and Goldman Sachs forecasting a 15% lead.

“We remain bullish on the US stock market and expected the average stock to perform better than the index,” said Michael Wilson, equity strategist at Morgan Stanley. “This is typical during the recovery phase when earnings drive stocks rather than the multiple.”

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A continued rebound in economic growth will fuel strong top line growth while lower costs will help increase margins, he said, noting that “a broadening of market performance away from growth structural ”will help propel the S&P 500 towards its 2021 end-of-year target of 3,900.

According to Goldman Sachs.

Company strategists believe the stock market may still be successful in an environment where these stocks underperform next year. They say the benchmark S&P 500 could hit their target of 4,300 if those five stocks only gain 5% next year if the remaining stocks average 20%.

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A “dumbbell strategy” consisting of both tactical positions in high-value stocks and long-term holdings of secular growth stocks is the best way to play the market next year, strategists said. by Goldman.

Not everyone on Wall Street expects the S&P 500 to experience strong gains in the coming year.

“A lot of optimism is already on the vaccine / recovery,” wrote Savita Subramanian, equity and quantitative strategist at Bank of America. Its end-of-year 2021 target for the S&P 500 is 3,800.

Subramanian noted that running vaccines and longer lockdowns are among the risks stocks will face next year.