NEW YORK: It is an understatement to say stock market investors had a good year in 2013. The Standard & Poor’s 500 index soared 28 percent, its best year since 1997. Including dividends, it gained 30 percent.
What lies ahead? The Associated Press asked leading market analysts and investment managers where they see the Standard & Poor’s 500 index by the end of 2014 and why.
Here are their answers:
CITIGROUP
• Year-end target: 1,900.
• Reasoning: Modest improvement in the economy and better company earnings. Enticed by higher returns, investors will move some cash from bonds back into stocks.
BANK OF AMERICA MERRILL LYNCH
• Year-end target: 2,000.
• Reasoning: With the Federal Reserve likely to end its bond-buying program, bonds face a tough year. In stocks, the focus will be large multinational companies that can benefit from an improving global economy.
GOLDMAN SACHS
• Year-end target: 1,900.
• Reasoning: The rally of 2013 cannot continue into 2014. Stocks are no longer cheap. Investors are paying more than $16 for every $1 of earnings, versus about $14 at the beginning of 2012. Stocks will keep rising, but more modestly.
BARCLAYS CAPITAL
• Year-end target: 1,900.
• Reasoning: The Fed pulling out of its stimulus program will lessen the support for U.S. stocks over the next year. Investors should focus on corporate earnings, as well as the modestly improving economy.
WELLS FARGO SECURITIES
• Year-end target: 1850-1900.
• Reasoning: The stock market will trend higher next year, but the returns are unlikely to repeat the gains of 2013. Another round of budget battles between the White House and Congress as well as a new Fed chairwoman will likely impact the market’s growth.
