JPMorgan reiterates its 4,900 year-end target for S&P 500 index

on Jun 1, 2022
  • Dubravsko Lakos says the S&P 500 index could climb another 20% from here.
  • The JPMorgan analyst defended his constructive call on CNBC Halftime Report.
  • The benchmark index recovered roughly 5.0% in the last ten days of May.

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Macro headwinds are hitting the U.S. equities hard this year, but a JPMorgan analyst is convinced the S&P 500 will end 2022 in the “green”.

SPX could hit 4,900 before the end of the year

Dubravko Lakos has a year-end target of 4,900 on the benchmark index that translates to a 20% upside from here. Defending his constructive call on CNBC’s “Halftime Report”, he said:

The sentiment is very negative and investors are basically positioned for a recession. Our base case is that there’s not going to be a recession over the next twelve months. So, from that angle, the portfolio is at wrong footing.

According to the JPMorgan analyst, valuations are getting very attractive, which could fuel a rally in the back half of 2022. While down today, SPX recovered roughly 5.0% in the final days of May.

Market is already pricing in a lot of the bad news

Fed’s preferred inflation gauge remained at a near forty-year high of 4.90% in April. Many expect QT to be a significant headwind for the stock market, but Lakos says much of it is already priced in. He added:

We need to see what happens on the inflation side. We need to see if the Fed goes restrictive or if they pause around neutral rates, in which case, positioning being so bearish, I think you’re set up for a potential reversal.

The U.S. Federal Reserve is scheduled for its next policy meeting in mid-June. Last week, Aureus Asset Management’s Karen Firestone also said the odds were in favour of a rally.