The New York Stock Exchange.
Photo by Spencer Platt.
Despite the recent stock market decline, the rise in the S&P 500 will not be hampered by the emergence of the Omicron variant, according to a note by analysts from JP Morgan.
The benchmark index is expected to gain 9% by the end of next year on the back of robust earnings growth as supply shocks cool, consumer spending habits normalized, and the US labor market recovers, among other factors.
Most of the equity upside should be realized between now and the first half of 2022, according to strategists led by Dubravko Lakos-Bujas. The second half of next year will see sideways action.
They said that the Omicron variant should be seen as a "sporadic setbacks" because of its higher natural and vaccine-acquired immunity.
The strategists see a shift in the Federal Reserve's policy as a key risk to their outlook, as well as a further delay in the reopening of China.
They recommended investors to maintain a pro-cyclical tilt with a focus on energy and financials, consumer services, and small caps. They think European stocks will do better than US ones.
The World Health Organization labeled the variant Omicron, which caused a massive sell-off Friday. The US stocks traded lower Tuesday after Moderna's CEO told the Financial Times there is no world in which vaccine effectiveness is the same against Omicron and Delta.
Business Insider has an original article.
