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.

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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.