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The S&P 500 is expected to reach the 5,000 mark in the year 2022, as earnings growth for Corporate America and a massive amount of spending support further US economic expansion, according to a Tuesday report.
The nominal profit boom is going to be repeated. The gap between GDP and treasury yields will be wide enough for companies to make excess profits, according to Sean Darby, global equity strategist at Jeffries.
The S&P 500 has risen this year, with the benchmark nearing 4,700 and 66 record highs in the process.
The S&P 500 could see earnings growth of about 50% in 2021, thanks to strong pricing power.
The lesson learned from the post-pandemic recovery is that central banks are more likely to leave real interest rates negative than they are to underestimating corporate pricing power. There is a positive correlation between GDP and profits.
The US is expected to expand its GDP by 5.1% in 2022, faster than other parts of the world.
Spending from US consumers, corporations, and government are some of the drivers of economic growth next year.
The US government's fiscalStimulus plans are still unfolding, as well as the fact that American consumers have $2.5 trillion of excess savings, according to a report by the investment bank.
The Federal Reserve will likely act as a modest headwind by raising interest rates twice in the next few years. US real interest rates will remain negative. Real interest rates are adjusted for inflation. The consumer price inflation rate in October was PukiWikint 6.2%, the fastest rate since 1990.
The US economy is expected to grow at a faster rate in the next two years.
It will be difficult because 2021 is unsurpassable. The recent ISM manufacturing saw the gap between new orders and inventories start to shrink, which was better than the trend in services.
Business Insider has an original article.
