Investor demand, economic growth and continued friendly Federal Reserve policies should push the stock market ever higher to the end of this year, even in the face of spreading Covid variants, according to Oppenheimer Asset Management.
John Stoltzfus, Oppenheimer’s chief investment strategist, raised his S&P 500 price target for the end of 2021 to 4,700 from 4,300. The new price target implies upside of 6.9% from the S&P 500′s closing value of 4,395.26 on Friday.
It’s also the highest 2021 target on CNBC’s strategist survey. Credit Suisse and JPMorgan are second-most bullish with 4,600 targets.
“A continuation of the recent broadening of investor appetite for stocks seen since last September among professional and private investors is likely to persist so long as inflation and interest rates prove moderate and manageable as expected by the Federal Reserve Board. Ultimately the stock market is broadly dependent on economic growth to drive revenues and earnings across the sectors,” Stoltzfus said.
The firm assumes the Covid pandemic will remain under control and an increase in vaccine use will help fight against highly transmissible coronavirus variants.
Oppenheimer also expects monetary policy to remain easy in the U.S. as the Fed aims to stimulate the economy recovery.
“In our view economic data and corporate revenue and earnings results thus far this year suggest the US will continue to progress in its recovery from the pandemic emergency and move toward a sustainable economic expansion of moderate growth that leads the world by virtue of demand generated by the US consumer as well as innovation by US corporations,” Stoltzfus said.
New infrastructure stimulus could further support economic growth, according to Stoltzfus. The Senate on Sunday finalized the text of an infrastructure package that would pour $550 billion in new spending over five years into projects such as roads, bridges, public transport, broadband, rail, water and airports.
The S&P 500 is up 17.02% in 2021.
Stoltzfus raised his earnings forecast for the S&P 500 for 2021 to $196 from $175 and gets to his new target by applying a 24 price-earnings multiple to that new profit figure.