UBS Chief Investment Officer Mark Haefele predicts the S&P 500 will hit 4,600 by the end of this year and 5,000 by the end of next year.
MarketWatch obtained the commentary that includes his forecast.
The 4,600 benchmark represents a 2% gain from the current level of 4,521. The 5,000 benchmark represents an 11% gain from the current level and a 9% gain from 4,600.
The forecast may sound conservative, but the S&P 500 already has climbed 29% over the past year.
“The S&P 500 has broken above 4,500 for the first time, taking gains for 2021 to over 20%,” Haefele said.
“This might seem surprising given the recent run of negative news, including disappointing U.S. consumer data and a continual rise in COVID-19 infections. But we believe that the momentum toward reopening and recovery is intact and that there is further upside to equities.”
Among the bullish factors Haefele cites: a fifth-straight quarter of strong earnings, with total corporate profits up almost 90% from last year. Revenue growth is so strong that it’s dwarfing inflation pressure.
“We believe cost pressures for businesses should subside as supply begins to catch up,” he said.
“In addition, consumers’ balance sheets are at their strongest in decades due to the significant buildup in household savings over the past year, and retailers will continue to restock to keep up with demand.”
And where is the strength in the stock market? “With the economic recovery broadening, we expect cyclical sectors, including energy and financials, to take the lead,” Haefele said.