In its U.S. stock market outlook for 2022, JPMorgan sees stocks building on gains in 2019, even as earnings growth is expected to slow and nominal growth begins to reverse. The firm sees cyclical areas of the market as the best performers, as interest rates are expected to rise. Moreover, it believes that the economy is nearing a full recovery and that the U.S. stock market will reach 5050 by year-end in 2022, which would be a 7% gain over last year's close.
JPMorgan's analysts are bullish about the stock market's future, and they expect the S&P 500 to rally slightly in 2022. Their price target implies a gain of nearly eight percent from the S&P 500 index. The company says that "robust" earnings growth, an improving labor market, and strong consumer spending will drive the market higher in 2022. However, they warn that the stock market could fall as supply chain issues begin to manifest themselves.
While the recent spike in volatility may have prompted investors to reconsider their U.S. stock market outlook, long-term investors should not let the volatile market derail their plans. While the S&P 500 index is still up two-thirds from its March 2020 low, the recent spike in volatility could make investors hesitant to re-enter the market. In the meantime, defensive trades, such as financials and industrials, are gaining ground.
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