(Bloomberg) — Goldman Sachs Group Inc. strategists lifted their outlook for U.S. stocks, saying the rally that has pushed the country’s benchmark index to successive record highs will continue into next year.
“We forecast the S&P 500 index will climb by 9% to 5,100 at year-end 2022, reflecting a prospective total return of 10% including dividends,” strategists led by David J. Kostin wrote. Goldman had previously forecast a 4% rise to 4,900 points by the end of next year.
The prediction joins other bullish Wall Street outlooks for U.S. and European equities, following a solid earnings season and as concerns about rising inflation and rate hikes recede. Global fund managers in Bank of America Corp.’s November survey are ending the year with the biggest overweight in U.S. stocks since August 2013, while JPMorgan Chase & Co. strategists said they remain bullish on equities on the expectation that central banks will remain dovish.
“Real rates, while rising, will remain negative, and investor equity allocations will continue to establish record highs,” Goldman’s strategists wrote in a note to clients on Tuesday. “Corporate earnings will grow and lift share prices. The equity bull market will continue.”
Goldman advised investors to be selective, avoiding companies with high labor costs and stocks valued entirely on long-term growth expectations. The strategists recommended overweight positions on the information technology, financials and health care sectors, and underweight on consumer staples, utilities, telecom services and “expensive” autos.
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