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Wall Street experts argue over what will happen to the US stock market next year

The above graph reflects the dynamics of the S&P 500 Index (white) and the average forecast of experts surveyed by Bloomberg for the end of 2021. Source: Bloomberg The divergence in forecasts of the leading Wall Street banks for the S&P 500 has reached almost historical proportions. Everyone agrees that vaccines will drive economic growth, but debate how this will affect the stock market. The most bullish position with forecasts of 4,400 points (about + 20% from current levels – is taken by Dubravko Lakos-Bugas from JPMorgan, while his colleagues from Citigroup and Bank of America Tobias Levkovich and Savita Subramanian fear that the main some of the expected positive has already been included in prices. Their forecast for the S&P 500 at the end of next year is 3,800 points, implying less than 5% growth from current levels. A similar gap in the expectations of leading banks has already been observed during periods of high uncertainty, for example, in the years following the global financial crisis of 2008-2009. All this speaks of the difficulty of forecasting economic dynamics after overcoming the recession. The fall in company profits in 2020 did not stop the general public from hedge funds to retail investors from sharply raising rates on further gains in the stock market following good news about vaccines and expectations of further stimulus. The S&P 500 is now well over 60% above the coronavirus lows in March, and its price-earnings (P / E) ratio is approaching the dot-com bubble levels of the late 1990s / early 2000s. “We have never been in a similar situation before,” states the managing director of The Wealth Alliance ($ 1 billion under management – approx. “Stocks are expensive and world interest rates are as low as ever. Many economic models do not work when we are in such extreme conditions. ” The average forecast of 17 experts surveyed by Bloomberg and specializing in predicting the behavior of the stock market for the S&P 500 at the end of 2021 is 4,035 points. This scenario implies a 10% rise in the index from current levels, which is the second best forecast since 2009, but at the same time only slightly exceeds the average annual growth of 9.5% that the S&P 500 showed over this period. Over the past 20 years, the average forecast of experts surveyed by Bloomberg has never implied a decline in the US stock market in the next 12 months. A year ago, they were badly wrong when they advised not to wait for a repeat of the S&P 500 rally that took place in 2019. In particular, they referred to the risks associated with the US presidential elections and the escalation of the trade conflict between the US and China. The average forecast of these experts for the S&P 500 at the end of 2020 was 3,280 points, which is more than 10% below current levels. And this is despite the coronavirus pandemic. MarketSnapshot – ProFinance.Ru news and important market events in Telegram Prepared by based on Bloomberg data America: Time to Sell Stocks JPMorgan Explains Top Threat to Markets in 2021

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