'Market nirvana': JPMorgan says the S&P 500 will surge another 11% by early 2021 as the market faces its best backdrop in years
- President-elect Joe Biden's victory and a divided Congress form a "market nirvana" scenario for investors, JPMorgan
- In a note to clients, the team lifted its S&P 500 target for early 2021 to 4,000, implying a roughly 11% rally from current levels.
- While Biden is likely to push for additional fiscal stimulus, Senate Republicans would block market-adverse policies like tax hikes and stricter regulations,
- The new target could be nullified if Democrats win both runoff elections in Georgia and take control of the Senate, the team added.
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After bouts of market turbulence driven by the pandemic, US-China trade tensions, and election uncertainties, stocks are on track for a sustained rally, JPMorgan said Monday.
The bank's market outlook "is significantly clearing up," strategists led by
The year-end target was reached on Monday as stocks climbed higher. Major indexes surged after Pfizer announced its coronavirus vaccine candidate was found to be more than 90% effective at preventing COVID-19 in trials. The pharmaceutical giant said it planned to apply for emergency use authorization to more rapidly distribute the drug.The runoff elections for Georgia's two Senate seats present the most significant short-term risk, the bank said. Democratic victories would create a blue-wave election outcome and form a government controlled by Democrats. That "would pose downside risk" by negating the divided-government scenario deemed ideal by the strategists. The risk is likely overstated, the team added, since Republicans are largely expected to win at least one of the seats.
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