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Brad McMillan, chief investment officer for Commonwealth Financial Network, recently released his 2022 Market and Economic Outlook report.

One of the main themes of this year’s report: the return to normal for the market and the economy in 2022 that McMillan is expecting, and what it will look like.

2022 Targets:The good news for investors is that McMillan is anticipating more upside for the SPDR S&P 500 ETF Trust in 2022. Commonwealth Financial Network has a year-end 2022 S&P 500 price target of 5,000, suggesting nearly 10% of additional upside for stocks.

McMillan is also projecting 7.5% nominal economic growth and 3.5% real economic growth in 2022 and has a year-end U.S. Treasury 10-year yield target of 2.5%.

McMillan said new market highs in 2022 will be driven by different factors than the ones that drove the S&P 500’s recovery from its March 2020 lows.

Market gains in 2020 and 2021 were driven in large part by pandemic-related news, economic reopenings, fiscal stimulus and monetary policy. In 2022, McMillan said policies will continue to normalize and attention will shift back from the pandemic to earnings numbers.

Factors To Watch:Analysts are calling for 7.6% S&P 500 earnings growth in 2022, a number McMillan said is reasonably in-line with his expectations for economic growth and stock market upside. But persistently high inflation and rising interest rates could create risk to stock market valuations next year, even if the S&P 500 hits its earnings growth target.

“We will move back into a normal, understandable environment, and markets will respond to those factors in normal ways,” McMillan said.

“After an exceptional time, markets will be able to operate off a stable base —which will help across the board. This is the goal we have been chasing since the pandemic started, and 2022 should be the year we get there.”

Benzinga’s Take:A 10% annual gain for the S&P 500 in 2022 wouldn’t be particularly impressive from a historical standpoint. However, considering the S&P 500 is on track to make 2021 its third consecutive year of at least 16% gains, another year of double-digit returns in 2022 would continue a strong multiyear stretch for stocks.