For all the uncertainty around Washington, JPMorgan's stock strategist is unfazed, raising his S&P 500 forecast Friday in expectation that tax reform will happen and the U.S. dollar's decline will boost earnings.
"In addition to favorable earnings momentum, as we approach year-end, market should gradually price in some higher probability of a tax deal, which we see currently as underpriced," Dubravko Lakos-Bujas, head of U.S. strategy and global quant research at JPMorgan, said in a report written with a team of strategists.
He raised his year-end price target for the S&P 500 by 150 points to 2,550, a 3 percent rise from Thursday's near-record close.
Lakos-Bujas also expects the dollar to weaken further, helping the earnings of many S&P 500 companies that sell overseas. A weaker dollar makes their goods cheaper for foreign buyers.
JPMorgan economists expect the Federal Open Market Committee next week to signal it will start reducing its balance sheet in September, the report said.
Source: Bloomberg Pro Terminal
Junior Trader Stefan Panteleev
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