S&P 500 Index to trade at 3,500 by June 2021 in the base scenario

Global financial markets have rebounded strongly from their March lows when fears about the COVID-19 health crisis peaked. The S&P 500 index has risen more than 45% since then and has almost fully recovered to pre-pandemic levels. Economists at UBS review their three current set of scenarios, and forecast S&P 500 at 3,500 by end June 2021 in the central scenario, and at 3,700 and 2,800 in the upside and downside scenario respectively.

Key quotes

“In our central scenario, we expect no renewed nationwide lockdowns. Moderate restrictions on activity should be sufficient to keep outbreaks manageable, with a vaccine widely available from 2Q 2021. This, combined with expansionary monetary policy and a moderate increase in fiscal stimulus, should allow for a rebound of economic activity to pre-pandemic levels by 2022. Against this backdrop, and with yields anchored close to record low levels, we think that the equity risk premium can normalize to pre-pandemic levels and would project the S&P 500 to trade at 3,500 by end June 2021.”

“In our upside scenario, we think a combination of earlier-than-expected vaccine availability, increased fiscal stimulus, status quo in US-China relations, and a 'benign' outcome to the US presidential election would lead to equity risk premia falling below pre-pandemic levels, and we would project the S&P 500 to trade at 3,700 by end June 2021. We would also expect further dollar weakness.”

“In our downside scenario, we would expect the S&P 500 to trade at 2,800 by end June 2021. We think that gold and the Swiss franc are among the best potential hedges for this scenario.”

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.