20 U S market strategists reveal their 2021 predictions for the S&P 500
A small majority of market strategists surveyed by CNBC predict that US stocks will continue to rally in 2021 and the S&P 500 will grow by 8-22% over current levels.
12 out of 20 market strategists from major US financial institutions surveyed by CNBC International predict that S&P will rise to 4,000 – four 500. The index closed the trading session on Monday at 3,691.96, just below the closing high of 2020.
Fourteen strategists described their outlook on stocks next year as «cautiously optimistic». Three said they «very optimistic», and three more said that they «careful». Upbeat analysts hoped for continued economic stimulus in the United States and the rollout of the Covid-19 vaccine, which has already begun in several countries, including the United Kingdom..
Four strategists predict that next year S&P closes at 3,500 to 4,000, with four more expecting the index to decline between 3,000 and 3,500.
CNBC offered strategists anonymity in exchange for their opinions. The email survey ran from November 25 to December 3.
The wide range of targets among those surveyed highlights their uncertainty about vaccine production and distribution plans as the Covid-19 vaccination process begins. According to Johns Hopkins University, the United States currently reports more than 2,000 coronavirus deaths every day, the highest death toll since the pandemic began..
But most analysts remain optimistic about the big picture of markets next year..
«We believe that as we get closer to 2021, the broader story will continue to represent a true economic discovery in the US and around the world, driven by the proliferation of vaccines and increased global economic activity.», – the analyst said.
«If we see a rise and recovery in earnings in 2021, while rates remain low and fiscal stimulus is added to the system … this will provide a favorable backdrop for risky assets in general.», – continued analyst.
Another respondent said: «We think that low rates combined with a rebound in profits S&P 500 will force stocks to hit new highs in 2021».
Despite the ambitious index targets of many CNBC interlocutors, even some upbeat respondents said they would be closely monitoring the fight against the pandemic and the steps governments are taking to stimulate the economy..
«I see 15% growth potential when the world is online again. Central banks around the world have pumped in so much liquidity to stem a market crash that more normalized market conditions give rise to the next phase of the bull run.», – said an analyst who also monitors «delays in stimulating the US economy, the next potential wave of Covid-19 and potential vaccine shortages».
US dollar and other currencies
Strategists shared their views on currencies, and only three people surveyed named the US dollar as the favorite of the group of dollar, euro, yuan, yen and pound.
Six analysts have determined that the euro will bring the most profit in 2020, and seven have chosen the Chinese yuan.
«We expect the euro to be driven by both the eurozone’s rebound from a double recession after the first months of the year, and concerns about weak US fiscal and monetary policy along with a growing US trade and budget deficit.», – said one strategist. – The Australian dollar is to be commended on the rise in commodity prices and the Chinese yuan on the continuing recovery of the Chinese economy».
A major financial institution that took part in the survey predicts that the yuan will reach 6.25 against the dollar by the end of 2021. Chinese currency last traded at 6.54 per dollar.
Another respondent predicted that euro area policies would boost confidence in the recovery of the European economy after the pandemic. «I do think the euro will fall early next year, but unexpectedly it will resume its recent rally for much of next year.», – he said.
«Europe is going to break out of this newest wave of coronavirus before the US, and this will help them recover faster than the US, the analyst continued. – More importantly, the ECB will remain more flexible than the US Federal Reserve in 2021».
Stock picks in 2021
When asked which leading stocks and sectors investors will bet on in 2021, most responded that they like inexpensive «cyclical» stocks that will benefit from the reopening of the economy after the virus. Cyclical stocks move with the momentum of the larger economy.
Stocks that analysts identified as stocks to buy and hold in 2021 included Exxon Mobil, Chevron, Baker Hughes, Boeing, Qualcomm, Visa, and Disney..
«Qualcomm has a value with an end-2021 target of $ 170 per share», – said one analyst thus highlighting the emergence of 5G in smartphones and a company that is attracting Apple as a new buyer of chips for the new iPhones launched during the 2020 holidays.
That said, little was said about tech stocks – the darlings of the market in 2020. One strategist said: «Google is still buying with a 12-month target of $ 2,119 per share as it catches up with other big tech companies. Advertising spending has been rising as sectors such as travel and tourism recover».
A well-known institutional investor who took part in the survey supported the priority of emerging markets over developed ones, predicting 18% growth potential of the MSCI Emerging Market Index by the end of 2021.
The latest poll of American strategists by CNBC International in August asked for their predictions about the presidential election. Fourteen out of twenty at that time predicted a victory for Joe Biden.