- JPMorgan‘s Grace Peters told CNBC’s “Squawk Box Europe” on Tuesday the S&P 500 will hit 3,750 by September 2021.
- That represents a 12% premium over Tuesday’s closing price of 3,335.47.
- On the outlook for US stocks, she said: “We can see around a 10% upside over a 12-month view.”
- Peters said investors should look at cyclical stocks and areas that have seen “structural growth” such as construction, health care innovation and digital transformation stocks.
- Banks and financials are areas investors should be avoiding, according to Peters.
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Peters, who is managing director and head of European equity strategy at JP Morgan Private Bank, said investors should focus on cyclical stocks in the next 12 months to benefit from economic recovery in the wake of the Covid-19 pandemic.
Peters said: “We think certainly that the US markets can make new highs over the next 12 months … we still think the earnings picture for the US corporate is very strong … and also it’s that broader economic backdrop when we look at equities relative to other asset classes.”
“We can see around a 10% upside over a 12-month view,” she said, referring to the outlook for the S&P 500.
JPMorgan is forecasting the S&P 500 will hit 3,750 by September 2021.
That is roughly 12% higher than Tuesday’s close of 3,335.47.
The private bank also reiterated JPMorgan’s previous 3,500-3,600 end-of-year target range for the S&P 500.
The S&P 500 is headed for its first monthly drop in six months. Before that stocks had staged a remarkable recovery since hitting multi-year lows in March underpinned by rock-bottom interest rates and a boom in technology stocks.
Peters said investors should focus on areas of business that are seeing “structural growth” such as digital transformation, health care and construction material stocks.
“Our view is that we are in the midst of an economic recovery and as such stocks broadly are going to move up.”
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Peters noted while fiscal stimulus has a “slightly different flavor” in different parts of the world, she is optimistic it is “coming together’ to create an “equitable economic recovery.”
But Peters said banks and financials were not areas that presented the same sorts of opportunities for investors.
“I do not think the pivot is towards the banks specifically. Along the way we are going to get bouts of volatility and periods of consolidation,” she said. “We think people should be using those periods of consolidation to add to cyclical exposures. Banks and financials do not feature within our view of cyclical exposures one should be adding,” she added.