The stock market should continue powering high into 2021. A new survey indicates that a majority of analysts expect the S&P 500 to rally by between 8% and 22% next year, in continuation of the current upward momentum.
S&P 500 2021 Outlook
Analysts from major financial institutions polled by CNBC expect the S&P 500 to power to record highs of between 4,000 and 4,500. A majority of the analysts remain cautiously optimistic about the stock market prospects, with a few remaining optimistic and others cautious.
The pumping of additional stimulus packages is one of the factors that should continue to support further rallies in the stock market. Similarly, the rollout of COVID-19 vaccines, which has already begun, should also help strengthen investors’ sentiments about stocks.
Amid the bullish sentiments, there is still a cloud of concern given the uncertainty around vaccine production and distribution plans. The United States is reporting an average of 2,000 deaths daily, with the situation threatening to get out of hand heading into the Christmas season.
Some states in the U.S have already resorted to stringent measures geared towards curbing the spread of the virus. Lockdowns could take a significant toll on the economy, struggling with its biggest contraction in more than a decade. How well the pandemic is managed will determine a great deal if investors will continue buying stocks, as has been the case for the better part of the year.
IPO vs. SPAC 2021 Outlook
The boom in the stock market can also be attributed to a surge in the number of high profile Initial Public Offerings amid the pandemic. It’s been a good year for IPOs but better for Special Purpose Acquisition Companies, to say the least
In 2020 alone, there have been 194 traditional IPO deals, which have ended up raising $67 billion. On the other hand, there have been 200 SPAC’s which have ended up raising $64 billion. Who will win come 2021 is still an open discussion as both IPO and SPAC’s are subject to the same rules. The opening up of the economy on subsiding COVID-19 risks should work for both IPO and SPAC markets.