Stocks are likely to rise, but gains will be limited because valuations are high. Earnings growth should be strong, fueled by consumer spending and capital expenditures. Risks include supply chains issues persisting, labor shortages continuing, and monetary policy tightening more quickly than expected. Most of these outlooks were published before the Omicron variant emerged, but strategists generally agree that the economy is better prepared for new waves of Covid infections.
⚠️ It’s incredibly difficult to predict with any accuracy where the stock market will be in a year. In addition to the countless number of variables to consider, there are also the totally unpredictable developments that occur along the way. Nevertheless, it can be fun to follow these targets. It helps you get a sense of the various Wall Street firm’s level of bullishness or bearishness.
📈📉 Stock market roller coaster: The S&P 500 fell 1.2% last week, but it’s still up 20.8% for the year. Since we got news of the Omicron variant, the stock market went down, then up, then down, then up, then down, then up, and then down.
🏛 The Fed is watching Omicron
From Fed Chair Jerome Powell’s testimony to the Senate Banking Committee on Monday: “The recent rise in COVID-19 cases and the emergence of the Omicron variant pose downside risks to employment and economic activity and increased uncertainty for inflation. Greater concerns about the virus could reduce people’s willingness to work in person, which would slow progress in the labor market and intensify supply-chain disruptions.”
🚚 Supply chains are improving: According to the Institute of Supply Management, manufacturing activity accelerated in November. The details of the ISM’s new report were encouraging: Delivery times were down, which suggests supply chains are improving; employment was up, which suggests labor shortage may be improving; and prices continued climbing but at a slowing rate, which suggests inflation may be cooling.
🛍 Cyber Monday cooled: Consumers spent $10.7 billion online on Monday, according to Adobe Analytics. That’s down 1.2% from a year ago. That said, it’s not smart to read too much into this. One day’s worth of shopping never tells you much about anything but one day’s worth of shopping.
Down the road 🛣
The stakes are high as high inflation readings have been putting increasing amounts of pressure on the Fed to accelerate the tightening of monetary policy. But right now optimism toward the market is still high!🎉🎉🎉
TLDR: Stocks are likely to rise!🆙🆙🆙
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