Why JPMorgan sees the S&P 500 climbing another 6% before year-end despite Wall Street's economic growth concerns

• JPMorgan bumped its S&P 500 price target for 2021 to 4,700, from 4,600.
• The firm remains bullish on the outlook for stocks as many on Wall Street are calling for a correction.
• According to JPMorgan, the recent economic slowdown is Delta-driven and temporary.

Amid a handful of Wall Street firms scaling back their stock market outlooks for the rest of the year, JPMorgan is remaining bullish.

In a recent note, a team of equity strategists led by Dubravko Lakos-Bujas said they're confident that strong growth lies ahead despite concerns that the recent downshift in economic and business cycle momentum will weigh on stocks.

The strategists raised their year-end S&P 500 price target to 4,700 from 4,600, representing a 6% gain from current levels. They also see the benchmark index hitting 5,000 at some time in 2022, representing a 12.5% gain from Tuesday's close.

JPMorgan explained that the recent economic slowdown seen from the delayed labor market recovery and lower consumer sentiment is merely temporary and driven by the Delta variant. The strategists noted that data is indicating the Delta wave could be peaking and the holiday season will be strong for businesses.

"As long as Covid continues to ease, strong momentum should continue into 2022 as businesses start to rebuild depleted inventories and ramp-up capex from historically depressed levels," said JPMorgan. "At the same time, cross-border activity has the potential to more meaningfully rebound for the first time since the onset of the pandemic."

The firm's call comes as many on Wall Street scale back their expectations for the rest of 2021. On Tuesday, RBC and Morgan Stanley told investors to brace for a correction of up to 10% in the S&P 500. Earlier, Goldman Sachs said that the biggest risks for stocks for the remainder of the year is the threat of higher corporate taxes.

JPMorgan noted that tax changes represent a source of downside risk to stocks, but emphasized that the probability of significant change in the corporate tax rate is low. Strategists also said that the stock market may face occasional pullbacks if coronavirus infection rates spike, but that won't dim the S&P 500's year-end target.