ALLIANCEBERNSTEIN HOLDING L.P. After three supercharged years for US equities, many investors wonder whether the market still has fuel for 2022. While higher valuations warrant caution, we believe a carefully chosen allocation can capture advantages inherent to the US market that underpin solid long-term return potential.
Few investors expected US stocks to post such strong returns last year. The S&P 500 index surged by 28.7% in 2021, capping a three-year gain of 100.4%. The prolonged bull rally pushed up valuations, with the S&P 500's price/earnings ratio ending the year at 21.3x, well above other developed markets.
In early January, volatility in US stocks-and particularly the technology sector-underscored investor concerns. Yet despite the risks, we think US stocks offer several advantages in 2022. First, US companies are expected to continue posting solid earnings growth and profitability. Second, beyond the five largest stocks, many high-quality businesses trade at more attractive valuations. Third, US firms have record amounts of cash available to deploy for share buybacks.
Few investors expected US stocks to post such strong returns last year. The S&P 500 index surged by 28.7% in 2021, capping a three-year gain of 100.4%. The prolonged bull rally pushed up valuations, with the S&P 500's price/earnings ratio ending the year at 21.3x, well above other developed markets.
In early January, volatility in US stocks-and particularly the technology sector-underscored investor concerns. Yet despite the risks, we think US stocks offer several advantages in 2022. First, US companies are expected to continue posting solid earnings growth and profitability. Second, beyond the five largest stocks, many high-quality businesses trade at more attractive valuations. Third, US firms have record amounts of cash available to deploy for share buybacks.
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AllianceBernstein Holding LP published this content on 11 January 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 12 January 2022 18:25:03 UTC.
