Daily Management Review

JPMorgan: The S&P 500 will grow to 3000 points in 2018


12/15/2017


JPMorgan Chase & Co. expects that the "bullish" phase of the market will continue next year. But the growth will relate to the technology sector, writes Bloomberg.



Investment Zen
Investment Zen
JPMorgan Chase & Co. joined Oppenheimer and Evercore ISI, and became the third major bank that predicts that the S&P 500 index will grow to 3,000 points at the end of 2018. If the US stock index hits this mark, it will increase by 13% from the closing level in Thursday.

"The expansionist phase of the business cycle, synchronized global profit growth, tax reform in the US" should continue to contribute to the growth of shares, wrote JPMorgan strategist Dubravko Lakos in a note to customers on Thursday.

At the same time, the strategist expects that the shares of major technology companies that have made a big contribution to the S&P 500 rally this year will lag next year.

Since the beginning of the year, the stock index has increased by 18%. Shares of technology companies in the index jumped by 37% since the beginning of the year, which pushed their cost to the maximum levels in eight years.

The leaders of growth in 2018 will be shares of financial companies as "key beneficiaries" of the tax reform, Lakos believes. Weakening regulation and the potential for higher interest rates will also contribute to the growth of shares in the financial sector.

John Stoltzfus of Oppenheimer and Dennis Debusschere of Evercore ISI are another strategists who believe that the S&P 500 will reach the 3,000 point mark next year.

The consensus forecast of other experts interviewed by Bloomberg is 2838 points. Most of them recommend buying or holding shares of technology companies.

In early December, Republicans in the US Senate approved a bill that provides for a reduction in corporate income tax and a reduction in the tax burden on US citizens.

After many hours of negotiations and adjustments, the document was still adopted with a minimum margin of votes. This is the biggest success of US President Donald Trump since taking office. In addition, this is the largest tax reform in the US since the 1980s.

According to the authors, not only the change in the tax code will lead to an increase in profits, creation of new jobs, higher wages and an increase in the competitiveness of the economy as a whole, but also to the repatriation of capital.

Investors were optimistic about the news about the passage of the tax bill through the Senate. Now Republicans in the House of Representatives and the Senate are working on a compromise bill, which should be sent to the US president by the end of the year.

source: bloomberg.com






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