The benchmark S&P 500 index <.SPX> should surge back to its October 2007 record above 1,500 by the end of 2012, provided the U.S. economy sees a V-shaped recovery, JPMorgan Chase Chief U.S. Equity Strategist Thomas Lee said on Wednesday.

The global economy is in the midst of a synchronized recovery, Lee said at the Reuters Investment Outlook Summit. If we end up with a V-shaped recovery, we could go back to our record high of 1,500 in 2011-2012, he added, referring to the S&P 500.

The S&P 500 fell 0.4 percent to 908 on Wednesday.

Lee also reiterated his year-end 2009 target of 1,100 for the S&P 500, saying the United States will likely come out of its recession some time this summer, followed by the rest of the developed world.

In October 2007, the S&P 500 hit a record closing high of 1,565.15, before falling back. In March of this year, it slumped to a 12-year closing low, but has since rebounded by about 40 percent on hopes the recession that begun in December 2007 was moderating.

Lee added that a market correction in the wake of the recent run-up would be healthy, and could lure back investors who opted to sit out the recent rally.

This rally has left many investors uninvested or underinvested. The pullback is the entry point to really see more meaningful money put to work, said Lee, who has been named a top analyst in Institutional Investor magazine's annual all-star poll.

He favors the financials, industrials, technology and consumer discretionaries sectors, in that order, saying the sectors would be the biggest beneficiaries of an economic recovery.

Within financials, he favors asset managers.

The S&P financial index <.GSPF> is up 84 percent since the broader market's 12-year low on March 9.

We are still favoring cyclicals over defensives, said Lee. Even so, he was mindful of potential risks to the recovery.

The biggest risk is that we're implicitly assuming the consumer is stabilizing. There's a lot of potential shocks. If oil goes to $100 a barrel, you can't have a recovery, said Lee, adding the other risk would be if savings rates somehow overshoot.

(Reporting by Ellis Mnyandu; additional reporting by Jennifer Ablan; editing by Jeffrey Benkoe)