Technically Speaking: Wall Street Sets Its Sights On S&P 500

Just recently in our “Daily Market Commentary” (subscribe for free), we discussed Wall Street setting its sights on S&P 5000.

“Wells Fargo’s Chris Harvey raised his year-end S&P 500 price target to 4,825 from 3,850, as reported by Bloomberg’s Lu Wang. This move follows a weekend note by David Lefkowitz, head of equities for the Americas at UBS Wealth Management, who raised his year-end price target for the S&P 500 to 4,600 from 4,500. 

Lefkowitz also raised his June 2022 price target to 4,800 from 4,650, with the real headline coming from his year-end 2022 S&P 500 price target — 5,000

‘Yes, the rally off the COVID-19 bottom in March 2020 has been extraordinary, but we think there are further gains ahead,’ Lefkowitz writes. ‘Solid economic and corporate profit growth, in conjunction with a still-accommodative Fed, means that the environment for stocks remains favorable. As a result of our higher EPS estimates, we raise our targets for the S&P 500 for December 2021 by 100 points to 4,600 and June 2022 by 150 points to 4,800. We initiate our December 2022 target of 5,000, representing about 13% price appreciation from current levels.’” – Yahoo

The Race To 5000

Considering the marketalready doubled from the pandemic lowsthe escalation of price targets is not surprising. Such is particularly the case when Wall Street needs to sell products to retail investors.

“The following graph and commentary from GMO, show that over the last year corporations took advantage of higher share prices. Interestingly, IPO issuance is currently running at the same pace as the market peak in 2000. Massive issuance from existing stocks is largely responsible for the big difference between total issuance today versus 2000.” – Michael Lebowitz

S&P 5000 Wall Street, Technically Speaking: Wall Street Sets Its Sights On S&P 5000

Like roaches in the kitchen, when there is one, there are always others. Credit Suisse also hiked price targets suggesting that earnings growth is the driving factor. To wit:

With this 2022 outlook, Lefkowitz joins Credit Suisse’s Jonathan Golub who earlier this month put a price target of 5,000 on the S&P 500 for the end of 2022. The equity strategy team at Goldman Sachs also garnered headlines earlier this month in raising their year-end price target to 4,700 from 4,300 while putting a year-end 2022 price target on the benchmark index of 4,900.

Lefkowitz sees earnings growth, not multiple expansionas the driving force behind the market’s rally in the year ahead. 

‘Our price targets assume a forward P/E multiple of about 20x, slightly below current levels of 21x. We expect valuations to remain above historical averages mostly due to the very low interest rate environment. Said another way, stocks continue to look appealing relative to bonds.’” – Yahoo

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