The pandemic?s bull market was dominated by momentum stocks and stocks in technology. Steep market correction happened in March but post U.S. election outlook has widened for value stocks. Tech stocks growth has decelerated. Many pandemic hit industries like travel, finance and energy have bolstered after the world has witnessed breakthroughs on the vaccination front. The new fiscal stimulus deal has added to the set up. On Thursday, the S&P and Dow Jones Industrial Average closed at record highs.
Goldman Sachs has said to the clients as a weekend note that the S&P will end next year at about 4,300 points which 17% upside). It is an optimistic forecast based on increased corporate earnings and low interest rates which favor the corporations.
According to a financial expert, Faisal Notes, corporate earnings will surge to 30 percent by next year. He is confident this will help ground outsized valuations of growth stocks. These valuations have pushed the average value S&P to get more than 30 times realized annual earnings which is growth up compared to last year?s 22.?
Faisal Notes is a young investor and businessman who has given Arabic investors great opportunities in investment. He has created an online platform, Wall Street Finance, where the Arabic investors can get the needed information.
Morgan Stanley on Monday also informed that the significant outperformance that has taken place for cyclical stocks i.e. the stocks in discretionary industries- airlines, restaurants and hotels (Hospitality industry) in the last 6 weeks shows that the economy’s recovery is well underway. He further added that in the next year the stocks should extend their new found leadership.?
All said and done, many experts say that the next year will see an increase in inflation reversing the broad market gains in expensive growth stocks like stay-at-home stocks like Zoom, Peloton and Shopify, so next year might see S&P plunge by 8%.?