Stocks have seen an impressive rally since Trump’s win on hopes of fiscal reflation and upbeat U.S. economic data points. The S&P 500-based ETF SPY has added 6%, the Dow Jones Industrial Average-based fund DIA has advanced over 8% while Nasdaq hastacked on 5.2% gains.
Trump’s pledges for fiscal reflation, corporate tax and deregulation have even led SPY to grab around $13 billion in assets in December. iShares Core S&P 500 IVV and Vanguard 500 ETF VOO hauled in about $2.91 billion and $1.20 billion, respectively, last month.
Goldman Sachs has set a year-end target for the S&P 500 at 2,300, though it expects the index to touch 2,400 level before sliding later. With the S&P 500 currently trading at 2,267.89, the March level translates into a 5.8% upside while held for a year will give investors just 1.4% more returns from now on.Goldman believes that Trump’s proposal to cut tax rates from 35% to 15% will surely give a boost to corporate earnings but the federal deficit may inflate by 60%.
BMO Capital expects a year-end target of 2,350. Deutsche Bank expects the same. BMO Capital went on to explain that though many are expecting a correction ahead, no one sees a prolonged bear market.
Investors are likely to realize decent gains in the near term. Investors should also note that SPY is yet to enter the overvalued territory with a relative strength index of 57.83, indicating there is more room to run.
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