Oppenheimer sees a 13% S&P 500 gain next year on a resilient economy, strong earnings

Published Mon, Dec 13 20212:17 PM EST

Oppenheimer expects the stock market to pull off another strong year with double-digit returns on the back of the economic recovery from the pandemic. The Wall Street firm set its 2022 S & P 500 target at 5,330, which represents a 13% gain from Friday's close of 4,712.02. The equity benchmark has rallied about 25% this year to new record highs amid the reopening, though worries about the rollback of monetary stimulus and the emergence of a new coronavirus variant have spurred volatility into the year-end. Oppenheimer believes that there will be further success by science in addressing and responding to challenges brought by the pandemic and its variants. Israeli researchers at the Sheba Medical Center and the Health Ministry's Central Virology Laboratory concluded on Saturday that the three-shot course of the Pfizer - BioNTech Covid-19 vaccine was effective against the new omicron variant. The White House's top infectious disease expert Dr. Anthony Fauci called Covid booster shots "optimal care ." Oppenheimer's price target is also based on a "continuation of the stateside economy to show resilience amidst the current period of uncertainty in a process of reopening." Meanwhile, the firm expects positive corporate revenue and earnings trends to persist. Corporate America just handed in a stellar third-quarter earnings season with 81% of the S & P 500 companies reporting better-than-expected profits, according to Refinitiv data. The S & P 500 companies grew earnings by 42.6% in the third quarter year over year, the data said. Oppenheimer also believes that monetary policy will stay relatively supportive. The Federal Reserve is expected to discuss speeding up the end of its bond-buying program at their two-day policy meeting this week. Fed Chair Jerome Powell, as well as a parade of Fed speakers , all recently suggested the central bank could end the $120 billion monthly bond purchase program sooner than the current timeline of June 2022. Accelerating the timeline for tapering could also move forward the central bank's plans for interest rate hikes, which could spook investors. "The length and pace of the tapering period is to be determined by the degree of resilience exhibited in economic data over the course of the taper as well as by improvements in other key areas including: suitably addressing higher inflation trends and restoring supply chain efficiencies," Oppenheimer said.

Traders work on the floor of the New York Stock Exchange (NYSE) on December 02, 2021 in New York City.

Spencer Platt | Getty Images

Oppenheimer expects the stock market to pull off another strong year with double-digit returns on the back of the economic recovery from the pandemic.