Barclays says a 'trifecta' of factors will lift the S&P 500 to 4,000 next year

Published Tue, Nov 24 202010:29 AM EST

Jesse Pound @/in/jesse-pound @jesserpound

(This story is for CNBC Pro subscribers only). Three major catalysts should help the S & P 500 gain another 12% by the end of 2021, according to Barclays. The investment firm set its end-of-2021 target for the broad market index at 4,000, which is 11.8% above where the S & P 500 closed on Monday. A coronavirus vaccine, politics and an earnings comeback are supporting the market, Barclays said. "A trifecta of recent positive catalysts should continue to buoy markets. Equities have welcomed a decisive Biden victory and a divided Congress, and news flow on vaccine efficacy has been much better than expected. Importantly, corporate earnings continue to surprise to the upside and we expect this trend to continue," the note said. November has seen three straight Monday's of positive vaccine news, boosting stocks. The S & P 500 is up more than 10% month to date. The outcome of the federal elections earlier this month also seem to have created a best-of-both worlds scenario for markets. Joe Biden's cushion of several states in the Electoral College made for a clear victory despite legal challenges from President Donald Trump's legal team and other Republicans. Meanwhile, the "blue wave" didn't materialize in the Senate, with Republicans holding 50 seats ahead of two Georgia run-offs, making Biden's proposed tax increases seem unlikely. This political situation will probably result in further stimulus, as well, Barclays said. On the earnings front, the Wall Street consensus for the fourth quarter is below Barclay's bottoms-up forecast, suggesting upside for stocks. Other factors that should help the markets are continued easy monetary policy from the Federal Reserve and cash coming off the sidelines, according to Barclays. "Equity fund flows have turned positive in recent weeks after significant outflows for much of the year, and this trend is likely to continue in our opinion, leading to upward pressure for equity prices," the note said. Barclays said in the note that it expected the stock market to look forward past a near-term rise in cases of Covid-19 as investors focused on an economic recovery in 2021. The investment included a list of companies where medium-term impact of Covid-19 would be positive for their stocks, including PayPal , Adobe and Chipotle Mexican Grill .

Traders work the floor of the New York Stock Exchange.

NYSE

(This story is for CNBC Pro subscribers only).

Three major catalysts should help the S&P 500 gain another 12% by the end of 2021, according to Barclays.

The investment firm set its end-of-2021 target for the broad market index at 4,000, which is 11.8% above where the S&P 500 closed on Monday.