Goldman Sachs says the S&P 500 will rise 14% in 2021. Here’s the roadmap

With global markets rebounding with the hope that massive economic stimulus will accompany the new administration of President-elect Joe Biden, Goldman Sachs’s projection that the S&P 500 will end 2021 at 4,300 points seems even more realistic. America’s chief equity strategist David J. Kostin has charted the path to 4,300.

Goldman expects the S&P 500 SPX to increase + 0.23% to 14% over the year, after one of the world’s most followed indices closed at 3,756 by the end of 2020. Additional growth of 7% is projected in the index for 2022, reaching 4,600. Behind a double-digit profitability forecast in 2021 is the investment bank’s bullish projection of the US economy: real gross domestic product growth of 6.4% compared to the consensus of 4.2%.

Adding to the economic momentum in stocks is a massive rise in earnings per share (EPS), a rebound from the terrible impact the COVID-19 pandemic has had on corporate results. Goldman expects EPS to skyrocket 31% in 2021 after falling 17% in 2020. Along with EPS, there are projections of a strong rebound in margins, which Goldman expects to be higher than the rising consensus forecast. An increase in margins is largely due to operating leverage, as well as cost restraint such as labor. High operating leverage stocks outperformed in 2020, and Goldman expects that trend to continue this year thanks to strong economic growth.

In many ways, the 18% rally in the S&P 500 in 2020 was helped by its five biggest stocks: tech giants Facebook FB, + 0.22%, Amazon AMZN, + 1.44%, Apple AAPL, + 1.62%, Microsoft MSFT. , + 0.66% and Alphabet GOOGL, + 0.57%. These stocks returned 56% compared to 11% growth for the remaining 495 companies. However, Goldman cautions that investors are complacent about antitrust risks. While China’s antitrust actions wiped out the performance of Chinese tech stocks in just eight weeks, the market has largely failed to react to the Justice Department’s lawsuit against Google and the Federal Trade Commission’s lawsuit against Facebook.

Closing the roadmap at 4,300 are the industry weights recommended by Goldman Sachs. The investment bank has information technology, healthcare, industry and materials classified as overweight, while communication services, consumer staples, utilities and real estate are underweight.

The rumor A day after Donald Trump became the first president to be indicted twice, President-elect Joe Biden is ready to propose a $ 2 trillion increase in fiscal spending to help the American economy overcome the pandemic. of COVID-19, according to a CNN report. Shares of Alibaba 9988, + 5.00% and Tencent 700, + 5.62% rose in Hong Kong, and Baidu rose on the previous Nasdaq market, after reports that, after all, American investors did not they will be prohibited from investing in the Chinese Internet giants. It’s a big day for data, with initial and ongoing jobless claims pending. Around 800,000 initial jobless claims are expected to be filed, up from 787,000 last week. But Federal Reserve Chairman Jerome Powell’s 12:30 pm EST speech on the economy is likely to be the star of the economic show. The National Highway Traffic Safety Administration has asked electric car maker Tesla TSLA, + 0.59% to voluntarily recall 158,000 Model S and Model X cars, after tentatively concluding that a possible defect in the vehicles’ display screen it could affect safety. Also read: He started buying Tesla at just $ 7.50, and now he is retiring at 39 with a value of $ 12 million; still refusing to sell a single share Running out of crypto? According to Cointelegraph, the exchange platform eToro is struggling to keep up with “unprecedented demand,” warning cryptocurrency traders that limited liquidity means that there may be limitations on purchase orders. Plus: Bitcoin And Its ‘Fun Business‘ Should Be Regulated Globally, Says Shares Of European Central Bank Head, Virgin Galactic Space Flight Company, Up Nearly 12% In Previous New York Market After ARK Investment Management filed with the Securities and Exchange Commission to launch a space exploration. Investment fund. The markets looks like a positive day ahead. YM00, + 0.27% ES00, + 0.14% NQ00, -0.05% stock market futures are heading higher, ready for a strong open with the Dow heading higher more than 100 points. Asian markets NIK, + 0.85% HSI, + 0.93% SHCOMP, -0.91% rallied across the board, while European indices SXXP, + 0.41% UKX, + 0.72% DAX , + 0.20% PX1, + 0.10% are constantly green. Market optimism comes as investors look at a possible $ 2 trillion stimulus proposal from Biden. Sentiment is also fueled by the unusual easing of tensions between the United States and China as it appears that American investors will not be prevented from investing in some Chinese internet giants. The graphic

US Treasuries are in the spotlight on our Marshall Gittler chart of the day on BDSwiss. 10-year TMUBMUSD10Y yields, 1.107% initially moved lower on Wednesday, pressured by strong demand for 30-year bonds at a $ 24 billion auction. But the drop was reversed late in the day after the report on Biden’s stimulus plans. Random Reads Wanted: UK Bison Ranger, no previous experience expected. The mayor of a Houston suburb was elected by pulling a name out of a hat. Need to Know starts early and updates until the opening bell, but sign up here to receive it once in your email box. The e-mailed version will ship at approximately 7:30 am ET. Do you want more for the next day? Sign up for The Barron’s Daily, a morning investor briefing, featuring exclusive commentary from the Barron’s and MarketWatch writers.