4 reasons why the S&P 500 will soar 25% by the end of 2022, according to Goldman's US stock chief

• Goldman Sach's David Kostin told Bloomberg TV the S&P 500 could reach 4600 by the end of 2022, a roughly 25% gain from current levels.
• The chief US equity strategist laid out 4 reasons for his bullish prediction: an improving economy, rising earnings growth, historically low interest rates, and the so-called "TINA" trade that will continue to push investors into stocks.
• Kostin added that inflation will remain low which allows companies to have a broader level of earnings growth while keeping costs down.
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Goldman's David Kostin told Bloomberg TV on Wednesday the S&P 500 is set to gain 25% and reach 4600 by the end of 2022. He laid out 4 reasons why the broad index will soar in the next two years.

"You have an economy that's getting better, you have earnings that are growing, and you have the rates that are staying super low," the chief US equity strategist said. "And it's also the TINA trade...equities become the default opportunity."

"TINA," stands for there is no alternative. It describes how investors will buy stocks because no other assets provide the same returns. Kostin said that asset managers are continuing to load up on stocks as other assets like cash return zero, and this is likely to continue.

On the economic front, Goldman Sachs expects GDP growth to be roughly 5% next year, versus the consensus estimate of 3.8%. Kostin also said half of the US population could be inoculated with a COVID-19 vaccine by May 2021, further lifting the economy.

The strategist added that inflation will remain low which allows companies to have a broader level of earnings growth while keeping costs down. In a recent note, Kostin's team forecasted that S&P 500 profits will rebound sharply with a 29% jump to $175 in 2021, 5% above the consensus expectation of $168.

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Also, the Federal Reserve is holding interest rates low for the next three years, which Kostin said is a "very good backdrop for the equity market."

"That's the story, it's about an economy that's getting better, coming off the pandemic, and generally getting better, and the Fed on hold," Kostin said. "All of that is to the positive and I think the market is recognizing that and will continue to do that."

Goldman expects the S&P 500 to reach 3700 by the end of 2020 and 4300 by the end of 2021, one of the most bullish price targets on the Street.