S&P 500 underpinned by improving labour market

Today’s US Employment Report suggests that the recovery in the economy remains firmly intact despite the recent pick-up in coronavirus cases. This bolsters our view that the US stock market will not fall back sharply especially amid the tentative signs that the virus is now being brought under control. Admittedly, we forecast that the S&P 500, which has failed to make much headway today, will end this year a little lower than it is now, after a strong run. But we expect it to make renewed gains in 2021.