Wall Road's rise from pandemic lows should proceed, strategists say: Reuters / Ipsos ballot

© Reuters. FILE PHOTO: A Wall Street sign can be seen across from the New York Stock Exchange with a huge American flag in the background

By Caroline Valetkevitch

NEW YORK (Reuters) – According to a Reuters poll of strategists, the expected widespread release of a COVID-19 vaccine is expected to increase 9% as the expected widespread release of a COVID-19 vaccine leads to a recovery in the economy and corporate earnings .

After recovering more than 60% from the lows of the outbreak in March to a record high on November 16, the benchmark index is up around 10% year-to-date.

The S&P 500 benchmark will close at 3,900 in 2021, up 9% from last Monday's 3,577.59. This emerges from the mean forecast of 40 strategists that Reuters asked over the past two weeks.

The index is expected to be 3,600 by the end of 2020, which is close to its current level according to the survey median.

Recent evidence of high rates of efficacy in experimental COVID-19 vaccines has led to progress in stocks this month, and strategists in the survey cited vaccine advances as the main driver of their predictions.

"They expect a vaccine to be widely available by the second half of 2021," said Sameer Samana, senior global market strategist at Wells Fargo (NYSE 🙂 Investment Institute, which has a year-end forecast for 2021 for the S&P 500 of 3,900.

With a major recovery in the economy, Wall Street is likely to "grossly underestimate" next year's earnings rebound, said Jim Paulsen, chief investment strategist at The Leuthold Group in Minneapolis, which ends the S&P 500 at 4,100 next year.

"That's one thing that I think could be a great driving force," he said for stocks.

Wall Street analysts expect S&P 500 earnings to rise 23% in 2021, after falling more than 15% in 2020. This is evident from Refinitiv's I / B / E / S data.

When asked when revenue will return to pre-COVID-19 levels, most respondents said it would happen within a year.

Graphic: When will corporate earnings in the US stock markets return to pre-COVID-19 levels ?, https://graphics.reuters.com/USA-STOCKS/POLL/jbyprebdzve/chart.png

Recent vaccine-related hopes have breathed new life into cyclical stocks such as industrial and energy stocks that investors dumped earlier during the pandemic.

According to the survey, the number, which stood at 30,000 as of Monday, will be 32,500 next year, an increase of around 10% from Monday's close of trading.

Some strategists predict that cyclical gains will extend well into 2021, while others say the rotation may not last long.

Jonathan Golub, Chief Strategist, US Equities Credit Suisse (SIX 🙂 Securities is neutral on cyclicals in 2021. In his outlook for the next year, he wrote that "the fundamental argument for TECH + continues to be convincing", partly due to the expected growth in sales and margins. He predicts the S&P 500 will end at 4,050 next year.

The S&P 500 technology sector, which also includes Apple Inc (NASDAQ :). and Microsoft Corp. (NASDAQ :)., Is up around 30% year-to-date and has leading profits in its sectors, followed by the consumer staples sector, which includes Amazon (NASDAQ :).

Investors were bullish following Democrat Joe Biden's victory in the US presidential election without a "blue wave" of Democrats earlier this month. That feeling is likely to continue if a split Congress means limited regulatory changes and Biden's cabinet selection is market friendly.

On Monday, investors welcomed reports that Biden had selected former Federal Reserve Chair Janet Yellen as the next Treasury Secretary.

Strategists in the poll said the Fed will continue to provide accommodative aid to bolster the case for stocks over the next year.

"The Fed has announced that it will keep short interest rates at zero through at least 2023. When interest rates are extremely low, stocks have little competition," said Hank Smith, chief investment officer at Haverford Trust Co. in Radnor, Pennsylvania.

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