Thursday, January 12, 2012

2012 U.S. Stocks Forecast

Bart DiLiddo of Vectorvest reports:

U.S. stocks are expected to end next year with modest gains, despite the threat of a global downturn brought on by the euro zone debt crisis and a tepid domestic economy that may still need more stimulus, a Reuters poll found.

Strategists polled had solid hopes for the U.S. economy and many cited historically low price-to-earnings ratios. But the euro zone crisis has battered stock markets this year and there was a wide range of views on where Wall Street is headed.

The Standard & Poor's 500 index .SPX.INX is expected to rise about 7.5 percent from Wednesday's close to 1,340 by the end of next year, according to a median forecast from over 40 respondents polled over the last week.

Forecasts range from a high of 1,550 to a low of 718, almost as low as the nadir of March 2009, when it touched 666. That 832-point spread was the widest in all of the quarterly Reuters polls since the financial crisis began in 2008.


In summary, the global economy will be sluggish in 2012 with the likelihood of a recession in Europe. The US economy will be sluggish, but it will probably not go into a recession if our leaders continue to provide stimulus. The S&P 500 will probably trade in a range of plus or minus 10% of today's close in The Year Ahead.

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