A recent article in Bloomberg reports that “strategists have been too cautious in estimating the speed of the recovery,” and that the S&P 500 is surpassing its projected level by the widest gap since 1999.

The article notes that three weeks of gains have brought the S&P 500 towards 3,200, 9% above where strategists expected it to be at the end of 2020: “The S&P 500 has rallied more than 40% from its March low amid central bank stimulus and better-than-expected economic data, defying warnings about elevated valuations and a collapse in profits.” The gains are exerting pressure on forecasters that remain bearish regarding potential repercussions of the coronavirus lockdown, the article says, although some still remain skeptical. The article cites comments from Citigroup’s chief U.S. equity strategist Tobias Levkovich regarding the level of the S&P 500: “While 2,700 could be too low by some measures, we think 3,200 is too high since it is based on a premise that all problems have be resolved when so many unknowns suggest otherwise.”

Barclays’ Maneesh Deshpande expects the S&P 500 to end the year at 2,500: “Consensus expectations are for a V-shaped recovery in earnings, which we think is too optimistic,” he said, adding, “In addition to the mounting geopolitical risk surrounding the escalating U.S.-China tensions, we note that social activity has yet to pick up and expect capex to be reduced, as risks of a second wave of infections is high.”

The article concludes that many traders, stock pickers and money managers have been “reluctant to embrace the equity rally,” but adds that “from a contrarian perspective, such pessimism bodes well for the market because it means potential buying power.”