Tags: Bannister | S&P 500 | Fed | rate

Stifel Nicolaus' Bannister Raises S&P 500 Target 28 Percent

Monday, 25 Aug 2014 08:36 AM

By Dan Weil

A bull market can make believers out of skeptics, and that is apparently what has happened to Barry Bannister, chief portfolio strategist at Stifel Nicolaus.

He has increased his year-end target for the S&P 500 to 2,300 from 1,800 previously, a whopping 28 percent change.

The index closed at 1,988.40 Friday. So a rise to 2,300 would represent a 16 percent gain — not bad for four-plus months.

Editor’s Note:
Retire 10 Years Earlier With These 4 Stocks

The year-to-date 7 percent gain for stocks is "exactly in the middle in August-to-date changes for the S&P in the last 100 years. It's a pretty ordinary market," Bannister tells CNBC.

Low interest rates and a long rate cycle, as we're experiencing now, "don't really create value," he explains. "What they do is they reallocate price. And so, what you're doing is front-loading the market return."

Bannister is impressed with rising loan growth and "encouraged" by Federal Reserve Chair Janet Yellen's comments Friday when she said the economy is making progress, but that the labor market still has slack.

"I wouldn't look for a lot of [earnings] growth from here. It'll definitely be a case of margins starting to peak, but top lines starting to pick up, particularly exports," he notes.

"We're in that last one-third of the economic cycle, but we are about 5½ years into bull market, and it could become a secular bull market that crosses the six-year mark next March."

Other market participants share Bannister's bullishness. The S&P 500's climb to a record Thursday "has been supported by good U.S. economic data of late," Jim McDonald, chief investment strategist at Northern Trust, tells Bloomberg.

"The Fed is also doing a good job at preparing the market for the eventual increase in interest rates. As long as the economy continues to perform well, the market is in good shape."

Editor’s Note: Retire 10 Years Earlier With These 4 Stocks

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