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BMO Sees S&P 500 Hitting 5,300 Next Year, a 12% Gain

Chief Investment Strategist Brian Belski says 'Our secular bull market thesis for U.S. stocks remains alive and well.'
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BMO believes the stock market will continue to ascend next year, though less vigorously, after the S&P 500 has soared 25% year to date, 16% in 2020 and 30% in 2019.

The bank’s Chief Investment Strategist Brian Belski predicts the index will hit 5,300 in 2022. That would represent a gain of 13% from the Friday’s recent level of 4,699.

“Our secular bull market thesis for U.S. stocks remains alive and well,” he wrote in a commentary cited by CNBC.

To be sure, he acknowledges the market will face headwinds: inflation worries, supply chain disruption, rising yields, peak growth and uncertainty about the Federal Reserve and economic policy.

Consumer prices jumped 6.2% in the year through October, The 10-year Treasury yield has risen 11 basis points to 1.54% in the last 10 days. And some economists expect the Fed to begin raising rates early in the second half of next year.

But those worries won’t rule the day, Belski said.

“We believe any price weakness resulting from these concerns will prove to be buying opportunities as the positive fundamentals underpinning U.S. stocks remain in place,” he said.

“We choose to stick with realities of low interest rates, positive earnings and still VERY doubtful investor sentiment that will continue to propel U.S. stocks higher.”

On the other side of the ledger sits Goldman Sachs CEO David Solomon.

“[During] my 40-year career, there have been periods of time when greed has far outpaced fear,” he told Bloomberg. “We are in one of those periods. My experience says those periods aren’t long lived.”