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Strategists: The S&P 500 could grow to 8,000 in about 100 months

The team of Inigo Fraser-Jenkins and Alla Harmsworth from AllianceBernstein comes out with a new long-term forecast for the S&P 500

Over the next eight and a half years, the S&P 500 (^ GSPC) could reach 8,000, the duo said. The S&P 500 is currently trading in the shadow below 4,000, which was the pair’s previous target price for the main index.

The call is rooted in two expectations: low inflation and the inherent desire of investors to own shares relative to other assets.

“We say we are in a completely different political environment. For the first time in at least a decade, there is a plausible description of why inflation may rise. In addition, there are reasons why interest rates cannot react so quickly to inflation signals. This leaves us with the prospect of sustained low real yields that can justify market assessments, ”explained the two strategists.

“In absolute terms, the valuation seems to be a barrier to return. In addition, the lack of other attractive assets that offer positive real returns means that stock flows are likely to continue. ”

They acknowledge current market concerns about rising inflation and how this could affect interest rates and ultimately stock prices. The outbreak is a key risk for the S&P 500’s 8,000 forecast, they note.

“The most important point is that for the first time in at least a decade, there is a plausible case of inflation. “If it becomes ‘loose,’ it could undermine the outlook, but we will argue that moderate inflation would be positive,” said Fraser-Jenkins and Harmsworth.

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