Thursday, August 19, 2021
In this week’s LPL Market Signals podcast the strategists discussed the latest increase in cases of COVID-19 from the Delta variant. The uptick has their attention economically, although inventory replenishment and pent-up consumer demand still stand as key reasons they remain bullish on the economic recovery. Widespread lockdowns are extremely unlikely and peaks in cases in some of the regions hit earliest by the Delta variant are encouraging.
A blowout second quarter earnings season is almost fully in the books and LPL Research sees continued strong earnings growth ahead. Positive guidance, rising estimates, sizable upside surprises on the revenue line, and the aforementioned need for inventory restocking all support a positive earnings outlook for the rest of 2021 and beyond.
LPL Research has raised its S&P 500 earnings per share forecasts by 5-6% on August 16 to $205 for 2021 and $218 for 2022. Higher earnings expectations were the primary driver of their raised year-end S&P 500 fair value target for 2021 to 4,650-4,700 (up from 4,400-4,450).
Finally, the strategists discuss differences between the current environment and the stagflation era of the 1970s in response to some investor concerns about recent high inflation readings. LPL Research continues to believe that elevated inflation pressures will prove transitory.
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