Goldman Sachs says the S&P 500 will grow 14% in 2021. Here is the road map


Global markets rally with the expectation that massive economic stimulus will coincide with the launch of President-Elect Joe Biden’s new administration, Goldman Sachs, that the S&P 500 ends at 4,300 points in 2021 seems even more realistic. .

In our Phone of the day, David J., the investment bank’s chief US equity strategist. Kostin has done road mapping for 4,300.

Goldman watches the S&P 500 SPX,
+ 0.23%
A 14% increase during the year, after one of the world’s most closely watched indices to close at 3,756 by 2020. A further 7% increase in the index is projected to reach 2022 – 4,600.

Investment Bank has a rapid projection on the US economy under double-digit forecasts for returns in 2021 – 6.4% real GDP growth with a consensus of 4.2%.

Adding to the economic boost to equity is a huge increase in earnings per share (EPS), a rebound from the severe impact on the corporate-19 epidemic that has been on the lines of corporate downward. Goldman expects EPS to increase to 31% in 2021, after falling 17% in 2020.

A strong rebound in margins, coupled with EPS, is anticipated, which Goldman expects will exceed the consensus consensus forecast below. The increase in margin is largely driven by operating leverage, as well as reducing labor-like costs.

High operating leverage shares picked up in 2020 and Goldman expects strong economic growth to continue through this year.

In many ways, the 18% rally on the S&P 500 in 2020 was helped by its five largest stocks: technology giant Facebook BB,
+ 0.22%,
Amazon AMZN,
+ 1.44%,
Apple AAPL,
+ 1.62%,
Microsoft MSFT,
+ 0.66%,
And the alphabet GOOGL,
+ 0.57%.
These shares returned 56% compared to the 11% growth of the remaining 495 companies.

However, Goldman warns that investors are confident about antitrust risks.

While action against China’s antics wiped out Chinese tech stocks’ performance in just eight weeks, the market largely did not react to the Justice Department’s lawsuit against Google and the Federal Trade Commission’s lawsuit against Facebook.

Closing the road map for 4,300 is Goldman Sachs’ recommended sector weighting. The investment bank has information technology, healthcare, industry and content classified as overweight, while communications services, consumer staples, utilities and real estate are underweight.

The buzz

According to a CNN report, Donald Trump became the first president to impeach twice, after which Biden proposed a $ 2 trillion increase in fiscal spending to help the US economy get through the COVID-19 epidemic. .

Alibaba 9988,
+ 5.00%
And Tencent 700,
+ 5.62%
Shares rose in Hong Kong, and Baidu landed in the Nasdaq premarket, with reports suggesting that American investors would not be banned from investing in Chinese Internet giants.

This is a big day for data, with initial and continuing jobless claims. It is expected that around 800,000 initial unemployed claims will be reported from 787,000 last week. But Federal Reserve Chairman Jerome Powell’s speech on the economy at 12:30 pm is likely to be the star of the economic show.

The National Highway Traffic Safety Administration has called Tesla TSLA, an electric-car maker.
+ 0.59%
After voluntarily recalling 158,000 Model S and Model X cars, temporarily concluding that a potential defect in the display screen of the vehicles could affect safety.

Read also: He started buying Tesla at just $ 7.50, and is now retiring at the age of 39 with a value of $ 12 million – he still refuses to sell a single share

Running out of crypto? According to Cointelegraph, the exchange platform eToro is struggling to cope with “unprecedented demand”, warning cryptocurrency traders that limited liquidity means there may be limitations on purchase orders.

Plus: The European Central Bank chief said that bitcoin and its ‘funny business’ should be regulated globally

SPCE of Spaceflight Company Virgin Galactic,
+ 3.38%
The stock is up nearly 12% on the New York Stock Exchange, after ARK Investment Management filed with the Securities and Exchange Commission to launch a space-exploration exchange-traded fund.

market

It looks like a positive day. Stock market futures YM00,
+ 0.26%

ES00,
+ 0.12%

NQ00,
-0.02%
Pointing to the high point, set for a strong open with the Dow pointing to more than 100 points. Asian market NIK,
+ 0.85%

Hsi,
+ 0.93%

SHCOMP,
-0.91%
Rally across the board, while the European index SXXP
+ 0.41%

UKX,
+ 0.52%

DAX,
+ 0.22%

Px 1,
+ 0.07%
Are stable in green.

There is optimism in the market as investors receive a $ 2 trillion stimulus offer from Biden. The punishment has also increased because of tensions between the US and China, as it appears that American investors will not be prevented from investing in some Chinese Internet giants.

Chart

US Treasuries are in focus in our chart of the day from Marshall Gittler at BDSwiss.

Yield TMUBMUSD10Y on 10-year Treasury note,
1.109%
Initially went lower on Wednesday, going down from strong demand for 30-year bonds at the $ 24 billion auction. But the end of the day dropped after reports on Biden’s incentive plans.

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