3 reasons why the stock market has not yet hit its peak in 2021, according to DataTrek

© Xinhua/Wang Ying/ Getty Images Xinhua/Wang Ying/ Getty Images

  • Despite a near 5% correction from its record highs, the S&P 500 has not yet hit its peak in 2021, DataTrek said in a Wednesday note.
  • “There’s simply too large a gap between S&P earnings expectations and what Q2 actually delivered to get too bearish here,” DataTrek said.
  • These are the three reasons why the S&P 500 still has room to hit record highs by year-end.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Monday’s Evergrande-induced stock market sell-off helped spur a near 5% decline in the S&P 500 from its record high reached in early September.

The heightened uncertainty has led many Wall Street strategists to lean more bearish into the current drawdown, with Morgan Stanley’s Mike Wilson calling for a near 20% sell-off to about 4,000 on the S&P 500 by year-end.

But others are unfazed by the potential insolvency of Evergrande and are reaffirming their bullishness, including DataTrek Research co-founder Nicholas Colas.

“There’s simply too large a gap between S&P earnings expectations and what Q2 actually delivered to get too bearish here,” Colas said in a Wednesday note, adding,”there should be something left in US large caps over the remainder of the year – enough to see a new high.”

These are the three reasons why the S&P 500 still has room to hit record highs by year-end, according to DataTrek.

1. “The Federal Reserve is still clearly in the stock market’s corner.”

“[The Fed] is tiptoeing its way into bond purchase tapering. A rate increase in 2022 carries only coin-toss odds in Fed Funds Futures markets. More than anything, the Fed sees its mission as returning the US economy and particularly its labor market to a pre-pandemic state as quickly as possible. It’s not worried about inflation because, with 10-year Treasuries at 1.33 percent, the market is not worried about inflation. Oh, and it is abundantly clear that Chair Powell would like to be renominated, so the odds of a policy misstep that tanks equity markets now through year end are very low indeed,” Colas said.

2. “The S&P 500 is the highest quality broad stock market index anywhere in the world.”

“Lump together Apple, Microsoft, Amazon, Google, Facebook, Tesla and NVIDIA and that’s over a quarter (26%) of the index. All industry leaders in industries with great long term growth prospects. MSCI EAFE’s top holdings include just 2 tech companies (ASML, SAP) with a combined 2.9% weight. MSCI Emerging Markets is still overweight Chinese tech, which is going nowhere fast. Bottom line: whether the US/global economy grows a lot or just a little in 2021, US large caps will remain a go-to destination for marginal capital,” Colas said.

3. “There’s still an ample cushion of safety in terms of US corporate earnings expectations.”

“Remember that the S&P 500 printed an actual Q2 earnings result of $53/share in Q2. Wall Street analysts don’t expect earnings to see that level again until Q2 2022 and have $49/share in their models for the upcoming Q3 earnings season. Would corporate America be in such a rush to hire (and it clearly is) if C-suites were expecting an 8 percent decline in sequential earnings? No, they certainly would not. Which, of course implies that Q3 will be a very strong quarter and that 2022 estimate we mentioned above is certainly beatable,” Colas said.

Read the original article on Business Insider

Internet Explorer Channel Network
News Related

OTHER NEWS

IATF to discuss filing of raps over dolomite beach crowd —Galvez

© Danny Pata Kids check the water at the dolomite beach area along Roxas Boulevard in Manila on Sunday, October 24, 2021, amid the government’s warning that the water in ... Read more »

Making meaningful connections through customer experience

© Provided by BusinessWorld There is a natural disparity in the conversation about digital transformation. While the accessibility and affordability of technology nowadays have created digital natives out of the ... Read more »

What Giants' Dante Pettis learned from World Series-coaching Dad

Of the two memorabilia collections to mark the great hands in the family, Gary Pettis’ is more valuable, but his son’s is much larger. Not much time is spent in ... Read more »

All systems go for International Air Traffic Management Conference today

© Provided by CapeTalk The COVID-19 pandemic has devastated the global aviation industry with various lockdowns and restrictions impacting negatively. The world’s biggest international air traffic management conference, attracting over ... Read more »

'Pens down' and lights off: Umalusi urges Eskom not to load-shed during matric exams

© Provided by Times Live CEO Mafu Ramoketsi told the SABC Umalusi had appealed to the department of basic education to discuss mitigation measures with Eskom. “We note Eskom is implementing load-shedding ... Read more »

Tim Pavino sings about a remarkable young love in ‘We Were 16'

Male vocalist Tim Pavino relives the loving memoirs of a strayed young love in his newest single “We Were 16,” released under ABS-CBN’s Star Music. © Provided by LionhearTV “The ... Read more »

Asian stocks fall after Australia inflation accelerates

© Provided by Associated Press An electronic stock board is displayed at a conference hall in Tokyo, Wednesday, Oct. 27, 2021. Asian stock markets fell Wednesday after Australian inflation increased, ... Read more »

'I've always been an outgoing person. But after lockdown, socialising feels exhausting.'

© Getty Images ‘I’ve always been an outgoing person. But after lockdown, socialising feels exhausting.’ I’ve always been a life-of-the-party type – you know, loves a sesh, loves a storytelling ... Read more »

Sunak to hail Budget as ushering in 'new post-Covid economy' but Brits await detail

© Provided by City AM © Provided by City AM Chancellor Rishi Sunak working on his budget speech with his staff yesterday (source: Treasury) Billions of pounds of funding for ... Read more »

TP ICAP launches index to trade pace of climate change

© Reuters/Alessandro Bianchi FILE PHOTO: A child embraces a globe shaped balloon during a rally held ahead of the start of the 2015 Paris World Climate Change Conference, known as ... Read more »

Amarinder Singh says will form new party, 'fight from where Sidhu contests'

Former Punjab Chief Minister Amarinder Singh will launch a party months before Punjab polls. (File photo) Former Punjab Chief Minister Amarinder Singh confirmed forming his own political party in Punjab ... Read more »

Want to customize a Google Form? Here's how to create and edit one

Want to customize a Google Form? Here’s how to create and edit one Google Forms, developed by Google, is a tool which can help people to collect information from others ... Read more »

Sundar Pichai confirms JioPhone Next is on track to launch by Diwali

Sundar Pichai has stated that the JioPhone Next will be launched in India by Diwali. The Google CEO confirmed the launch timeline for the entry-level smartphone during the earnings call ... Read more »

Is shared ownership a solution or a shackle for first-time buyers?

© Bloomberg The number of mortgage approvals increased to a 14-month high in July – Bloomberg We have run out of hyperbole to describe the gravity-defying, often nonsensical, twists and ... Read more »

BASF hebt nach starkem Quartal Jahresziele erneut an

© KEYSTONE/GEORGIOS KEFALAS Die Geschäfte des weltgrössten Chemiekonzerns BASF laufen dank einer guten Nachfrage und höheren Preisen weiterhin rund. Für das Gesamtjahr wird das Unternehmen optimistischer. Für 2021 erwartet BASF ... Read more »

Gauteng health department under spotlight for R2,6 billion contracts

© Provided by The South African The Gauteng Health Department has paid 59 security companies R2.6 billion for contracts to guard public hospitals that were supposed to expire five years ... Read more »

Dubai's DP World reports volume growth of 11.9% in Q3 2021

© Motivate Publishing DP World Dubai-based port operator DP World Limited has handled 58.4 million TEU (twenty-foot equivalent units) across its global portfolio of container terminals during the first nine ... Read more »

Absa appoints Sello Moloko as chair-designate in the wake of Sipho Pityana fallout

Absa has appointed multi-faceted businessperson Sello Moloko as its chairperson-designate a day after bruising allegations against the bank and the banking regulator were made by its initial choice for the ... Read more »

Khalifa Fund connects Emirati entrepreneurs to manufacturers in production push

© Provided by The National Mouza Al Nasri, acting chief executive of Khalifa Fund for Enterprise Development, at the closing ceremony of F&B Innovation Lab event on Tuesday. Khushnum Bhandari ... Read more »

3 Catholic priests suspended for running for office in May 2022 elections

AT least three Catholic priests have been suspended from their clerical duties for seeking elective positions in the upcoming 2022 national and local elections. Suspended were Fr. Granwell Pitapit of ... Read more »

Sheikh Khaled bin Mohamed launches clean energy partnership between ADNOC, EWEC

Read more »

Short-term yields leap with inflation, China tech drops

© Reuters/ISSEI KATO A man wearing a protective face mask walks past a screen displaying the world’s markets indices outside a brokerage in Tokyo By Tom Westbrook SINGAPORE (Reuters) – ... Read more »

Budget 2021 latest news: Rishi Sunak could announce 30p hike on beer & NO VAT cut to household energy bills in speech

CHANCELLOR Rishi Sunak will unveil his second Budget of the year today, with economic plans that will take us through the winter. Rumoured measures include a 30p hike on the ... Read more »

How to Eat Nutritious Food This Festive Season, Chef Vikas Khanna Shares Tips

© Anjali Thakur | India.com Lifestyle Staff How to Eat Nutritious Food This Festive Season, Chef Vikas Khanna Shares Tips (Picture credit: Pixabay) Our kitchens must be filling up with ... Read more »

Drugs Case: NCB Summons Witness Prabhakar Sail to Probe Allegations of Corruption Against KP Gosavi And Sameer Wankhede

© Kritika Vaid | India.com Entertainment Desk NCB zonal director Sameer Wankhede Mumbai Drugs Case: The Narcotics Control Bureau (NCB) has issued summons to Prabhakar Sail, an independent witness in ... Read more »

Celebrity birthdays for Oct. 27

Celebrity Birthdays for Oct. 27:   Quebec singer-songwriter Gilles Vigneault is 93. Actor-comedian John Cleese is 82. Country songwriter-singer Dallas Frazier is 82. Author Maxine Hong Kingston is 81. Country singer Lee ... Read more »

Protesting N3 truckers were trying to get Minister Mbalula's attention - police

© Pixabay.com FILE: Dalia al-Darawish is preparing for an exam to become one of only a handful of qualified female Palestinian truck drivers, a test the 26-year-old sees as about ... Read more »

Finance Minister Enoch Godongwana distances himself from Sars salary dispute

© Provided by Daily News Johannesburg – Finance Minister Enoch Godongwana has maintained that he is not party to the salary dispute between the SA Revenue Service (Sars), its commissioner ... Read more »

'Anxious but positive': Matrics of 2021 set for final exams after difficult year

© EWN FILE: Matric pupils writing exams. CAPE TOWN – The country’s almost 900,000 matriculants are heading into their final National Senior Certificate exams on Wednesday morning and some have ... Read more »

West Ham vs Man City predicted line-ups: Team news ahead of Carabao Cup fixture tonight

© PA Wire David Moyes has impressed at West Ham (Peter Byrne/PA) – PA Wire Manchester City continue their search for a record fifth successive League Cup triumph when they ... Read more »

'A domino effect!' Queen described as 'pivotal' to the success of COP26

In a conversation on GB News, Colin Brazier claimed that the Queen‘s absence from COP26 could have potential “consequences” as Britain hopes to “showcase” its environmental plans to world leaders. ... Read more »

RIL arm offers Rs 375 per share to acquire 26% stake in Sterling and Wilson Solar

New Delhi: Reliance Group firm Reliance New Energy Solar has offered Rs 375 per share to acquire 4.91 crore shares of Sterling and Wilson Solar for over Rs 1,840 crore. ... Read more »

Best secret Santa gifts 2021: Ideas for your colleagues and friends

(Chococo) Christmas has (nearly) come around and that only means one thing – secret Santa. I can already see the beads of sweat gathering on your brow and hear your ... Read more »

«Bis heute hetzt er Menschen im ganzen Land auf»

Nach dem Tod des ehemaligen US-Aussenminister Colin Powells spottete Donald Trump über den Politiker. Dafür hat US-Präsident Joe Biden kein Verständnis. © AFP Joe Biden richtete sich mit klaren Worten ... Read more »

Atlanta Braves siegen zum Auftakt der World Series

© KEYSTONE/AP/Ashley Landis Die Atlanta Braves entscheiden die erste Partie der World Series für sich. Der Sieger der National League setzt sich zum Auftakt der Finalserie der MLB auswärts gegen ... Read more »

Atlantis The Palm's Cirque de Cuisine mega brunch returns this Christmas

© Motivate Publishing Atlantis-Christmas-cirque-de-cuisine-feat It’s one of the biggest Christmas events on the Dubai social calendar… It’s nearly November which means it’s legitimately time to start thinking about Christmas. Nothing ... Read more »

Perlu lebih fokus pada perubatan tradisional, komplementari, kata KJ

© Provided by Free Malaysia Today Menteri Kesihatan Khairy Jamaluddin berkata, Malaysia akan memastikan T&CM dan amalannya wujud seiring dengan perubatan moden dalam sistem penjagaan kesihatan. PETALING JAYA: Lebih tumpuan ... Read more »

Abu Dhabi's Formula 1 GP to be held at full capacity

© Motivate Publishing Abu Dhabi Formula 1 GP Organisers of the Formula 1 Etihad Airways Abu Dhabi Grand Prix 2021 have confirmed that the season’s final race week which will ... Read more »

T20 World Cup: Cricketers bring solace to Afghans back home

© Provided by The Times of India T20 World Cup win over Scotland cause for cheer amidst turmoil in the country For a bunch of players pretty much without a ... Read more »

#ShamiKiFarziTrolling Trends After Mohammed Shami Becomes Subject to Fake Trolls After Pakistan Beat India: DNA Report

© Ankit Banerjee | India.com Sports Desk #ShamiKiFarziTrolls T20 World Cup Mohammad Shami, Dubai: Mohammed Shami faced heavy backlash on social media following India’s humiliating defeat against Pakistan on Sunday ... Read more »
On free-english-test.com you will find lots of free English exam practice materials to help you improve your English skills: grammar, listening, reading, writing, ielts, toeic