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Siegel: Dow Still on Course for 18,000 This Year

Tuesday, 26 Aug 2014 05:36 PM

By Dan Weil

Stock guru Jeremy Siegel, finance professor at the University of Pennsylvania, is sticking with his prediction of 18,000 for the Dow Jones industrial average this year.

"I see the bull market continuing," he told CNBC. "Economic news has been really quite strong. Second-quarter earnings were strong." And full-year profit estimates are strong too, Siegel said.

It's possible the Dow could even reach 19,000 this year, he said. The 18,000 level represents a 5.2 percent increase from Tuesday's closing level of 17,106.70.

Editor’s Note: Dow Predicted Will Hit 60,000 — Buy These 4 Stocks Now

Investors are shrugging off geopolitical turmoil, Siegel notes.

"Remember, bull markets climb the wall of worry," he said. "What's going on in the Mideast, Ukraine—those are the worries. Bull markets top off when no one sees a problem on the horizon. We are not at that area."

A Federal Reserve interest-rate increase won't necessarily hurt stocks either, Siegel said.

"So, if the Fed tightens in March or April instead of late in the summer [of 2015], so it goes 50 basis points, is that going to end the bull market?" he asked. "I mean, that is still unbelievably low compared to anything historical," he said.

The Fed's federal funds rate target stands at a record low of zero to 0.25 percent.

Deutsche Bank economist Torsten Slok is bullish, too. "I believe the stock market will continue to go up until we get a recession. And we are nowhere near entering a recession," he wrote in a commentary obtained by Business Insider.

"Recessions happen because of a bubble bursting in capital expenditure (as we saw in 2000) or because of a bubble bursting in consumption (as in 2008) or when monetary policy is too tight."

None of that is occurring now, Slok said.

Editor’s Note: Dow Predicted Will Hit 60,000 — Buy These 4 Stocks Now

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