The record-setting stock market rally will gain steam in 2020 as the stage is set for the global economy to recover, according to J.P. Morgan.

Dubravko Lakos-Bujas, the bank's chief U.S. equity strategist, set his 2020 price target for the S&P 500 at 3,400, a roughly 8% gain from here. Betting on a limited U.S.-China trade deal and a reacceleration in the global economy, the analyst is more bullish than other Wall Street's big equity strategists who see a modest 5% rise on average.

"The business cycle should begin to gain stronger traction by early 2020, providing further room for market upside and continued style and sector rotation," Lakos-Bujas said in a note to clients on Monday. "We expect the rotation from Momentum into Value to persist as the global business cycle re-accelerates and puts upward pressure on bond yields and commodities."

The analyst expects most of the upside, if not all, to be realized before the U.S. presidential election in November 2020. He noted the election is generally good for stocks with the S&P 500 rising 12% on average through the prior year with a hit rate of 90%.

With about three weeks left in 2019, the S&P 500 has risen 25% this year, climbing a wall of worry that included escalated trade tensions, an earnings slowdown and a bid to impeach the President. The record rally in stocks was supported by the Federal Reserve's stimulus of three straight rate cuts in 2019.

"Easier monetary and fiscal policies are in motion globally with majority of the benefits expected to flow through the economy in the coming quarters," Lakos-Bujas said. "Global business sentiment should start to heal and help normalize investment activity including inventory restocking as fears related to U.S.-China trade, Brexit, and other one-off shocks to large economies fade."

Lakos-Bujas sees a partial U.S.-China trade deal with some rollback on tariffs to be agreed upon ahead of the 2020 election, at a minimum. The two countries have been in talks to finalize a so-called phase one trade deal since early October. Many expect stocks to come under pressure if they couldn't reach an agreement before the new tariffs on Chinese goods kick in on Dec.15.