Growth in corporate earnings in 2021 is likely to trigger a strong rally in the US stock market. Goldman Sachs expects the S&P 500 to gain 20% from the current levels by the end of next year.

According to the investment bank's report, the S&P 500 index could reach 4,300 and 4,600 points by the end of 2021 and 2020, respectively. The main driver for the stock market would be a surge in corporate profits, provided mainly by companies in the technology, materials, and consumer sectors. While some argue that the stocks of such giants as Facebook, Apple, Amazon, Microsoft, and Google are currently overvalued, Goldman Sachs sees more solid growth potential.

"Fundamentals support higher valuation for FAAMG," the bank said, adding that high-cap tech companies offered longer duration in a low-interest-rate environment, strong short-term growth, and low leverage.

Goldman projects a stunning economic recovery in the United States. In 2021, its gross domestic product is expected to hit 5.3%, well above consensus estimates of 3.8%, but below its 2021 global GDP growth forecast of 6%.