The major indexes have been hitting record high after record high this week as we near the end of a year that has seen stocks rocket higher and the end of a decade that has seen the longest bull market in history.
But while there are many who have said there’s little hope returns like those we’ve seen this year will be seen in 2020, there’s one analyst who sees double-digit upside at minimum for the coming year.
This week, Chief Investment Strategist at Oppenheimer Asset Management, John Stoltzfus, set his projection for the S&P 500 at the end of next year at 3,500. That would see the index 9.7% higher than where it now.
Stoltzfus wrote in a note that the recent developments on the trade front, including the phase one truce between the U.S. and China as well as progress on the USMCA trade agreement to replace NAFTA, should give the stock market the fuel it needs to climb higher next year.
“We see 2020 as a year that will be defined by a reassertion of global growth as the negative overhang affecting the global economy and markets is lifted as progress is made gradually in the ‘phases’ that we expect lie ahead,” Stoltzfus wrote.
The strategist also cited confidence in the Federal Reserve’s ability to successfully navigate “uncertain waters” as another reason he says the S&P 500 will see an expanding price-to-earnings multiple to 20 times earnings.
But Stoltzfus isn’t the only bull on the Street heading into 2020.
Piper Jaffray analysts pegged their target for the S&P 500 at 3,600 at the end of next year – 12.8% higher than where the index is currently at.
The firm noted that the presidential election is set to take center stage next year, and said that historically, election years have been kinder to the stock market than non-election years.
Since 1900, the the Dow Jones Industrial Average has posted average returns of 7.7% during election years and finished in the positive 70% of the time, the analysts said, that’s compared to non-election year returns of 7.3% with a 63% positivity rate.
The analysts also said that while trade policy is still at risk, trade-induced volatility will likely be temporary and will represent a buying opportunity. They also noted that improved economic data and monetary policy from the Fed should continue to support the stock market.
“As we look ahead to 2020, we are optimistic and see several catalysts that we believe will keep this bull market alive and kicking,” the Piper Jaffray analysts wrote in a note.