Credit SuisseOn Monday, it was said that there is still plenty of room for corporate profits to grow. This should cause the S&P 500 index to rise nearly 9% from now until the end of next year, reaching 5,000 points.

Credit Suisse reiterated that its target point for the end of 2021 is 4,600 points, which means a 3.7% increase from last Friday's closing price. However, the bank said that as investors struggle to cope with issues such as the resurgence of the COVID-19 pandemic and the Federal Reserve's eventual reduction of asset purchase plans, the stock market may be in trouble in the near future.

Analysts at Credit Suisse, headed by Jonathan Golub, chief strategist and head of quantitative research for US equities, wrote: “Over the past five quarters, analysts have seriously underestimated earnings per share, and we expect this trend to continue.”

Credit Suisse raised earnings per share expectations for companies that make up the S&P 500 index for 2021 and 2022, but lowered the price-earnings ratio forecast for the index.

They wrote, “Despite disappointing economic data, soaring input costs, and reduced inventories, second-quarter earnings per share beat expectations by 16% due to stronger revenue (up 5%) and profit margins (up 11%). We believe there is room for corporate profits to rise as vacant shelves are re-purchased and pricing rights are maintained. As unemployment falls further and wages rise, consumer spending should also improve.”