Goldman Sachs Sees S&P 500 Rising 14% in 2021

Plus, some stocks to consider as Biden unveils a stimulus plan.
Anthony RussoJan 14,2021,18:35

Stocks continued to rally on Thursday as President-elect Joe Biden prepares to take office and pass a big stimulus package while Covid-19 rages across the U.S. Meanwhile, analysts predict 2021 to be a good year for the markets.

In 2020, the S&P 500 enjoyed an 18% return thanks to tech giants including Apple (Nasdaq: AAPL), Facebook (Nasdaq: FB), Microsoft (Nasdaq: MSFT), Amazon (Nasdaq: AMZN), and Alphabet (Nasdaq: GOOGL) driving the growth.

Now, Goldman Sachs is forecasting another big year for the S&P 500, expecting the benchmark to leap 14% this year to 4,300 points. By the end of 2022, the S&P 500 is projected to reach 4,600 points.

The investment bank is also certain of the recovery of the U.S. economy and projects real gross domestic product to rise by 6.4% versus the consensus of 4.2% in 2021.

Goldman Sachs also projects the earnings per share will surge 31% in 2021. Last year, EPS slipped 17%. It also expects margins to be larger than the “bottom-up consensus forecast,” as cited by MarketWatch.

Biden to Unveil Big Stimulus Package

The bullish outlook by Goldman Sachs comes as Biden is expected to unveil an economic stimulus package Thursday that could surpass $1.5 trillion, as reported by Reuters today. The news outlet said, citing a person familiar with the matter, that the relief plan includes “commitment” to $1,400 checks.

Democrats will control the Senate but they may need some bipartisan support if West Virginia's Joe Manchin objects to the stimulus checks for working-class families. Manchin, who describes himself as a "moderate conservative Democrat,” told The Washington Post last week that he would "absolutely not" support passing $2,000 stimulus checks as the first priority. Instead, he said he sees priority No. 1 in administering and distributing vaccines.

Some Bets to Place Ahead of Potential New Stimulus

Here are some stocks that could benefit from the economic boost:

A good bet to might be on discounted retailers Dollar General (NYSE: DG) and Dollar Tree (Nasdaq: DLTR). Also, don’t shy away from bigger retailers including Walmart (NYSE: WMT) and Target (NYSE: TGT).

Intraday Thursday, the Dow Jones added 105 points, the S&P 500 gained 5 points, while the Nasdaq Composite rose 45 points.

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Topics:Goldman Sachs, S&P 500, Walmart, Target, Dollar Tree, Dollar General, Joe Biden.