Goldman Sachs bank: reasons for the growth of the S&P 500 Index in 2021
American bank Goldman Sachs published a forecast for the current year for the S&P 500 Index. According to its experts, the index will grow by 19%. In turn, U.S. GDP will be about 5.3%. These figures are higher than the consensus forecast, according to which GDP should grow by 3.8%.
The economy is showing good dynamics of recovery, which at the end was facilitated by the appearance of a vaccine against COVID-19. This situation will contribute to the bull market trend that has been holding since last year. By the end of 2021, analysts promise a rise in the S&P 500 Index to 4,300 points. By the end of 2022, we can expect a 7% increase, to 4,600 points.
The main factor behind the rally is an increase in corporate profits. According to experts of Goldman Sachs, this year in the S&P 500 can expect record earnings per share – about 175 dollars. It follows that the annual growth will be about 30%.
According to the bank’s experts, a large share of this profit will fall on companies from the technology segment, as well as the consumer sector.Despite the fact that many experts believe that securities of major Internet giants such as Facebook, Apple, Amazon overbought, Goldman argues that they still have potential for growth.
Technology corporations, which are highly capitalized, have favorable duration, even despite low interest rates. In addition, such market participants for the short term can offer good growth dynamics with a small debt load.
It should be noted that in 2020 the pessimistic forecasts of analysts did not come true. The S&P 500 index began rising in the second half of the year, and by early 2021 was up more than 12%.
At the end of 2020, the FRS was considering additional measures to stimulate the economy. However, the overall situation forced to postpone the changes, as the analysis of financial markets, that they are quite stable and sharp collapses are not expected.
In spring the FRS revised its policy regarding asset purchases and buying rates. The decision was primarily influenced by the spread of the vaccine and trends in the global market. Analysts at Goldman Sachs note that, as before, the FRS does not intend to fundamentally change the existing monetary policy, as the country has not yet reached optimal levels of employment and inflation. Therefore, for now, low credit rates will remain, which is a great stimulus for increasing the number of jobs and investment in the U.S. market. It will take a few years to reach these levels.