- RBC Capital expects the S&P 500 to climb 8% to 4,100 through 2021 as the US economy rebounds.
- The benchmark will reach new records despite a brief stumble that’s likely to arrive in the first half of the year, the firm’s analysts said.
- Market leadership will continue to shift from large-caps and growth stocks to value and cyclical names, they added.
Strategists led by Lori Calvasina set their 2021 target for the benchmark index at 4,100, implying a 7.9% climb for the S&P 500’s Tuesday closing level. Earnings are expected to rebound by 23% in 2021 and another 8% in 2022 as the US recovers from the coronavirus pandemic and its economic fallout. But such highs will likely only come after a brief stumble, according to the team. RBC expects a “period of consolidation” to drag on US equities before the market stages its next climb, with the dip likely arriving in the first half of the year. “It could be as mild as a mid-single-digit decline from the recent highs (taking the S&P 500 to about 3,600) or as deep as a drop in the mid-teens (about 3,200),” RBC’s team said in a note to clients. The S&P 500 stood at 3,848.94 as of 2:20 p.m. ET Wednesday, up 2.5% year-to-date. Stocks are sitting at record highs, but some analysts have raised concerns around whether the market is irrationally looking through significant risks. Indicators including retail sales and weekly jobless claims worsened in recent weeks, and COVID-19 cases continue to climb across the country. Vaccination and the chances of a Biden-backed stimulus bill have fueled the market’s latest gains, but herd immunity isn’t likely to be reached for months. Looking past the near-term, RBC named higher corporate taxes, tech-sector regulation, and a pullback of Federal Reserve support as other risks to its bullish outlook. Nick Note: the video and commentary is mostly bullshit. But they are starting to get high altitude sickness. Bubble markets end when they achieve exuberance. We are not their yet but getting close. I love the idea they are funding us to short the shit out of this insanity. But you need to understand this is not science but a trading art form. We may have to prob the downside several times before we catch the crash……