Bank’s S&P 500 forecast sees the index reaching 5,060 in 2022, reflecting a “glass half full” outlook based on still-strong corporate sales and profit growth, measured inflation and low interest rates, says Terry Sandven, U.S. When their 2022 price targets for all companies in the S&P 500 are factored together, they see the index closing out 2022 at 5,225, according to data compiled by FactSet. Conversely, Wells Fargo forecasts that the index could hit 5,300, delivering another year of strong gains.Īnalysts who cover individual stocks have a similarly optimistic outlook. On the low end, Morgan Stanley has a year-end 2022 target for the S&P 500 of 4,400, which would amount to a decline of almost 9% from current levels. Wall Street strategists have been trying to make sense of what 2022 has in store, and their forecasts are pretty wide-ranging. Here’s what to watch for in 2022.Īnalysts See Subdued Market Gains in 2022 and More Volatility The biggest question heading into 2022 is whether some catalyst-be it pandemic-related, a slowdown in economic growth, the Fed’s shifting policy, or something else-will finally drive a bigger selloff in the stock market than occurred in 2021. “There are pockets of significant weakness.” “This notion of resilience on the part of the market is only at the index level,” Sonders says. But the central bank’s policy shifts must be viewed in the context of broader market sentiment-and a change in sentiment remains the biggest risk to the market, she adds.Įven though the S&P 500 is poised to finish 2021 near (or potentially at) an all-time high, individual stocks haven’t fared so well-and 93% of the index’s constituents experienced a selloff in excess of 10% in 2021. Investors can expect the Fed to be one of the “dominant forces” influencing the market’s trajectory in 2022, says Sonders. Federal Reserve policymakers feel confident enough to signal plans to raise interest rates and end the Fed’s quantitative easing ( QE) program, shifting its focus to dealing with inflation. Unlike last year, the economy is on more solid footing. grapples with a rising number of Covid-19 cases and deaths. There may also be a sense of deja vu as the U.S. “There are so many unique uncertainties right now, including the virus that, sadly two years later, we don’t have in the rearview mirror,” says Liz Ann Sonders, managing director and chief investment strategist at Charles Schwab. But making predictions about the stock market is always a tricky endeavor, and 2022 is no exception. This means it’s already outperformed the 2002 to 2007 rally, which lasted nearly four times as long.Īfter a year like 2021, when the S&P 500 rose in excess of 27%, it might be tempting to assume the trend will simply continue in 2022. At just 21 months old, the bull market that began in March 2020 has already seen a gain of more than 114% in the S&P 500.

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