Heading into 2021, investors are optimistic about stimulus from the incoming Joe Biden administration, more help from the Federal Reserve, relief as Covid-19 vaccines are administered to millions and — most hopefully — a return to some kind of normal.
Those projections may be unrealistically bullish, said Barry Bannister, head of institutional equity strategy with Stifel. Bannister told CNN Business that his earnings forecasts for 2021 are 11% below Wall Street's consensus estimates — which also put earnings below pre-coronavirus levels in 2019. Investors also appear to be betting that multiple Covid-19 vaccines will be widely available in 2021 — and that enough people will get them in order to create a much-needed herd immunity to coronavirus. That may be a tall order.
Kinahan noted that companies like Disney and Starbucks — as well as the big airline and cruise companies — are at risk for another pullback. Those are among the stocks that individual TD Ameritrade investors have been selling United and Delta lately, he said.