CNBC "US Stock Market to Rise Another 8%"

[Image source=Yonhap News]

[Asia Economy Reporter Yujin Cho] The U.S. stock market, which continues to reach all-time highs, is expected to rise by an additional 8% by July.

According to U.S. economic media CNBC on the 18th (local time), Phil Orlando, Chief Analyst at Federated Hermes, forecasted that the Standard & Poor's (S&P) 500 index, a representative index of the New York Stock Exchange, could reach the 4500 level by July this year.

The 4500 level was originally presented as a target achievable by the end of the year, but the rise is occurring faster than expected, he said. The S&P 500 index hit a record high on the 16th, rising 15.05 points (0.36%) to 4185.47.

Orlando analyzed that the U.S. economy is growing and corporate profitability is improving. He expects the U.S. economy to grow by 6.4% this year, marking the strongest growth since 1984 (7.2% growth).

Recently, he raised his growth forecast for this year from 6.1% to 6.4%. He cited the $1.9 trillion COVID-19 relief package introduced by U.S. President Joe Biden as the reason for the upward revision in the growth rate.

The earnings outlook for U.S. companies is also optimistic. Orlando estimated that "first-quarter corporate earnings are coming out well" and are expected to increase by 30% year-over-year. He predicted that the earnings recession has ended and that in the second quarter, companies will benefit from fiscal stimulus, potentially doubling profits compared to last year.

However, he noted that uncertainties surrounding the Biden administration's infrastructure package and inflation could pose burdens on the stock market in the second half of the year. He added that it is difficult to know whether prices will continue to rise steadily, and if inflation persists, it will be necessary to observe whether the Federal Reserve (Fed) will shift to a more accommodative monetary policy.

Additionally, regarding the infrastructure package, since its impact on economic revitalization through manufacturing revival and supply chain reconstruction is greater, concerns about corporate tax increases are expected to have a limited effect on the stock market's direction.