Wall Street expects single-digit S&P 500 gain in 2016: poll

Mon Dec 14, 2015 8:27am EST
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By Caroline Valetkevitch

NEW YORK (Reuters) - A weak ending to 2015 and the expectation of improving profit growth in 2016 will set the stage for a single-digit gain in U.S. stocks next year, a modest forecast at least by recent standards, according to strategists polled by Reuters.

But even that fairly circumspect outlook faces significant risks, including rising U.S. interest rates and a lackluster global economy, the strategists said.

The S&P 500 is forecast to end 2016 at 2,207, up 10 percent from Friday's close of 2,012.37 and 5 percent higher than where it is expected to round off this year, according to the median forecast of 46 strategists polled by Reuters in the past week.

Strategists were similarly enthusiastic a year ago, when a similar poll pointed to expectations for an 11.5 percent rise in the S&P 500 for 2015.

With just three weeks left in 2015, the S&P 500 is down a little over 2 percent for the year. Strategists forecast it will rally into year-end to 2,100, up 2 percent from 2014.

Even then, that would be the smallest annual increase for the index since 2011, when it ended virtually unchanged.

"We think the (bull market) is going to continue but we're later into the cycle, so the returns we're expecting are lower than what we got earlier in the cycle," said Jill Carey Hall, equity and quant strategist at Bank of America Merrill Lynch in New York.

She and other strategists pointed to a likely improvement in earnings growth next year as a source of strength.   Continued...

Traders work on the floor of the New York Stock Exchange December 11, 2015. REUTERS/Brendan McDermid