U.S. markets open in 8 hours 27 minutes
  • S&P Futures

    4,433.75
    +0.75 (+0.02%)
     
  • Dow Futures

    34,792.00
    +49.00 (+0.14%)
     
  • Nasdaq Futures

    15,169.25
    -25.50 (-0.17%)
     
  • Russell 2000 Futures

    2,282.20
    +5.20 (+0.23%)
     
  • Crude Oil

    76.10
    +0.65 (+0.86%)
     
  • Gold

    1,750.30
    -1.70 (-0.10%)
     
  • Silver

    22.62
    -0.07 (-0.30%)
     
  • EUR/USD

    1.1705
    +0.0004 (+0.04%)
     
  • 10-Yr Bond

    1.4840
    0.0000 (0.00%)
     
  • Vix

    18.76
    +1.01 (+5.69%)
     
  • GBP/USD

    1.3716
    +0.0011 (+0.08%)
     
  • USD/JPY

    111.1450
    +0.1670 (+0.15%)
     
  • BTC-USD

    42,673.84
    -1,416.30 (-3.21%)
     
  • CMC Crypto 200

    1,057.88
    -43.64 (-3.96%)
     
  • FTSE 100

    7,063.40
    +11.92 (+0.17%)
     
  • Nikkei 225

    30,145.22
    -94.84 (-0.31%)
     
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

Wall Street is chasing stocks higher

·Anchor
·3 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

This article first appeared in the Morning Brief. Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET. Subscribe

Wednesday, August 25, 2021

S&P 500 targets are rising left and right

The calendar today reads August 25, but it's starting to feel like the year is over. 

Starbucks (SBUX) unleashed its Pumpkin Spice Latte on the masses Monday; the chain's holiday-themed cups are now right around the corner. And Wall Street strategists have been issuing revised outlooks for how high the stock market could be headed in the months ahead. 

Within the last month, no fewer than four Wall Street shops have either initiated or revised higher S&P 500 price targets for this year and next. And while the annual exercise of forecasting the year ahead is typically reserved for November and December, it seems that in this market the Street just can't wait. 

On Tuesday, Wells Fargo's Chris Harvey raised his year-end S&P 500 price target to 4,825 from 3,850, as reported by Bloomberg's Lu Wang. This move follows a weekend note by David Lefkowitz, head of equities for the Americas at UBS Wealth Management, who raised his year-end price target for the S&P 500 to 4,600 from 4,500. 

The S&P 500 closed at a record of 4,486 on Tuesday.  

Lefkowitz also raised his June 2022 price target to 4,800 from 4,650, with the real headline coming from his year-end 2022 S&P 500 price target — 5,000

"Yes, the rally off the COVID-19 bottom in March 2020 has been extraordinary, but we think there are further gains ahead," Lefkowitz writes. "Solid economic and corporate profit growth, in conjunction with a still-accommodative Fed, means that the environment for stocks remains favorable. As a result of our higher EPS estimates, we raise our targets for the S&P 500 for December 2021 by 100 points to 4,600 and June 2022 by 150 points to 4,800. We initiate our December 2022 target of 5,000, representing about 13% price appreciation from current levels."

With this 2022 outlook, Lefkowitz joins Credit Suisse's Jonathan Golub who earlier this month put a price target of 5,000 on the S&P 500 for the end of 2022. The equity strategy team at Goldman Sachs also garnered headlines earlier this month in raising their year-end price target to 4,700 from 4,300 while putting a year-end 2022 price target on the benchmark index of 4,900.

Like Golub, Lefkowitz sees earnings growth — not multiple expansion — as the driving force behind the market's rally in the year ahead. 

"Our price targets assume a forward P/E multiple of about 20x, slightly below current levels of 21x," Lefkowitz adds. "We expect valuations to remain above historical averages mostly due to the very low interest rate environment. Said another way, stocks continue to look appealing relative to bonds." 

By Myles Udland, reporter and anchor for Yahoo Finance Live. Follow him at @MylesUdland

Yahoo Finance Plus
Try Yahoo Finance Plus now.

Yahoo Finance Highlights

Why people are getting the inflation debate wrong: strategist

Bitcoin mining 'golden age' shows higher profits and demand for more infrastructure

Gundlach: We're running our economy 'like we're not interested in maintaining global reserve currency status'

Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, YouTube, and reddit