- JPMorgan‘s Grace Peters told CNBC’s “Squawk Box Europe” on Tuesday that the S&P 500 could hit 3,750 by September 2021.
- That would represent 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, healthcare, and digital-transformation stocks.
- Banks and financials are areas investors should avoid, according to Peters.
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Peters, the managing director and head of European equity strategy at JPMorgan Private Bank, said investors should focus on cyclical stocks in the next year to benefit from the economic recovery from the COVID-19 pandemic.
“Certainly we think the US markets can actually make new highs over the next 12 months,” she said.
“We still think the earnings picture for the US corporate is very strong,” Peters said, adding that “also it’s that broader economic backdrop when we look at equities relative to other asset classes.”
“So US equities, to us, we can see around a 10% upside over a 12-month view,” she said.
JPMorgan’s S&P 500 forecast of 3,750 would be roughly 12% higher than Tuesday’s close of 3,335.47.
The private bank also reiterated JPMorgan’s end-of-year target range of 3,500 to 3,600 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 multiyear 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, healthcare, and construction-materials stocks.
“Our view is that we are in the midst of an economic recovery, and as such stocks broadly are going to move up,” she said.
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Peters said that while fiscal stimulus has had a “slightly different flavor” in different parts of the world, she was optimistic it was “coming together” to create an “equitable recovery.”
But Peters said banks and financials were not areas that presented the same sorts of opportunities for investors.
“I don’t think that the pivot is toward the banks specifically,” she said, adding that “along the way we’re going to get bouts of volatility and periods of consolidation.”
“We think people should be using those periods of consolidation to add to cyclical exposures,” she added. “Banks and financials don’t expressly feature within our view of the cyclical exposures one should be adding.”