Stock market professionals have a hard time imagining a slump in the S&P 500 in 2021

None of the stock market analysts surveyed by MarketWatch for this report foresees a drop from current levels, which have already been perceived as lofty by more than a few market experts as investors enter a pivotal phase of the recovery from the worst pandemic in more then a century and a new presidential regime under President-elect Joe Biden, who takes the oath of office on January 20.

Despite nagging fears that valuations, and especially values ​​for large-capitalization technology companies, are perfectly priced, some companies, such as Tesla Inc. TSLA,
+ 2.44%,
As an example of a paradigm of Wall Street’s concern about market bubbles, many see stocks going in only one direction next year: skyward.

Read: The stock market is rich, but may be at a ‘much more reasonable valuation level than traditional measures suggest’

Analysts have no idea that the bull market for equities is running out, and instead give estimates for annual gains by the end of 2021, and in some cases predict dazzling rallies for the market in the next 12 months.

JPMorgan Chase’s Dubravko Lakos-Bujas delivers arguably one of the more gravity-defying predictions for the S&P 500 at 4,400, which would mean a breathtaking nearly 19% rise for the benchmark index.

To put that in perspective, the S&P 500 SPX,
+ 0.35%
has already made a profit of almost 15% in 2020, the Dow Jones Industrial Average DJIA,
+ 0.23%
is on track for a 6% increase in the year-to-date as the technology-heavy Nasdaq Composite Index COMP,
+ 0.26%
is on track for a 43% gain in 2020. And don’t even start with the astonishing gains delivered by the major stock benchmarks from the March 23 lows for the year.

And it’s not just bulls like Dubravko Lakos-Bujas and the handful of other strategists surveyed by MarketWatch this year, the equity analyst community as a whole is struggling to envision a world where the S&P 500 will end lower next year.

S&P 500 Analysts targets end of 2021

Analyst	Connectedness	Target 2021
Dubravko Lakos-Bujas	JPMorgan Chase	4400
Kristina Hooper	Invesco	4,350
David Kostin	Goldman Sachs	4,300
John Stoltzfus	Oppenheimer	4,300
Brian Belski	MET	4,200
Keith Parker	UBS	4,100
Maneesh Deshpande	Barclays	4,000
Julian Emanuel	BTIG	4,000
Sam Stovall	CFRA	4,080
Binky Chadha	German Bank	3,950
Mike Wilson	Morgan Stanley	3,900
Darrel Cronk	Wells Fargo Investment Institute	3,900
Tobias Levkovich	Citigroup	3,800
Savita Subramanian	BofA	3,800
Barry Bannister	Stifel	3,800 (in spring / summer)

The median price target for the S&P 500 index at the end of the year in 2021, according to FactSet data, is 4,027.21 as of Thursday afternoon, representing an increase of about 9% from the close of the broad market index in the holiday shortened week. just past.

It may be difficult to fault the almost unbridled enthusiasm for what lies ahead in 2021 after a year marred by the immeasurable tragedy of the COVID-19 pandemic.

In all, the U.S. has reported a total of 18,495,851 cases and 326,871 deaths as of Thursday afternoon, data from Johns Hopkins University shows. In addition, more than 22 million people lost their jobs during the worst epidemic in the US, bringing the economy to its knees.

Kristina Hooper, who maintains one of the more optimistic market outlooks for 2021, said progress in rolling out COVID vaccines and remedies has encouraged the bulls, and holding back all past and future is the Federal Reserve, which has vowed to keep interest rates stable in the area. 0% until at least 2023 and continue to buy bonds and make money from US federal debt.

“I expect a lot of the gains to take place in the first half of 2021, discounting strong economic expansion once vaccines are widely distributed,” Hooper told MarketWatch via email Thursday afternoon. “I also expect the Fed to remain extremely accommodative, which should be beneficial for risky assets, especially stocks,” she said.

CFRA’s Sam Stovall, whose S&P 500 target for 2021 is nearing the FactSet median, gives a relatively sober assessment of the stock outlook at 4,080.

Stovall told MarketWatch that “optimism is abundant,” referring to its research outlook for 2021, saying the target is justified by the Fed’s expected easy policy and hopes for further fiscal support from the government to get the fragile economic recovery on track. and the viral outbreak on the ropes.

“As we approach the start of 2021, there is an abundance of optimism,” he wrote. “A new government will be installed early in the new year, with the possibility of a unified Congress supporting it and offering the prospect of additional fiscal stimulus, along with the Federal Reserve pledging to do ‘whatever it takes,'” he said , referring to former European Central Bank President Mario Draghi’s now-famous promise in 2012 to preserve the euro at the height of the eurozone debt crisis.

BTIG’s Julian Emanuel and Michael Chu say next year will mean an epic “redistribution of wealth,” where small-capitalization stocks could outperform large-cap stocks and undermine annual value growth, leading to years of fallow. period for undervalued shares is aborted. Those dynamics will likely bring out the broader market, the pair predicted.

BTIG explains it like this:

It’s worth noting, however, that stock analysts weren’t even close to their projections for 2020, assuming the S&P 500 will maintain its current level during next week’s holiday-abbreviated trading.

Piper Jaffray’s Craig Johnson came closest to the current 3,700 series of the S&P 500 with an initial year-end target of 3,600, MarketWatch’s Chris Matthews reported.

To be fair, a pandemic is difficult to predict and few would be able to properly estimate before the end of March how the market would respond to the public health crisis. There are certainly some market participants lurking who suggest that a test of the market’s lows is still near, like here in April and here in May.

However, as MarketWatch columnist Mark Hulbert puts it, stock market forecasts are “not investment roadmaps,” adding that they are primarily marketing documents for fund management companies.

Bespoke Investment Group offers its own take on stock market forecasts with even more openness:

“We’re not pretending we know where the S&P will be trading in 12 months. The goals of Wall Street strategists are almost always wrong in their predictions, ”BIG writes in its 2021 outlook report.

“The whole game of strategists striving for year-end goals every year reminds us of Charlie Brown trying to kick a football. Time and again he tries to do it right, but each time Lucy has different plans. ”

The coming week

Looking ahead, there is little on the U.S. economic calendar in the last week of 2020 that will also be abbreviated as much of the world observes New Year Friday.

Tuesday, investors will be looking to the S&P Case-Shiller home price index for October at 9 a.m. Eastern Time, Wednesday will see a report on the advance in goods at 8:30 pm, a reading of manufacturing activity in Chicago at 9:45 am, and at 10:00 am pending home sale

The last day of the week and the year after Thursday conclude with a report on the weekly unemployment claims at 8:30 am