Morgan Stanley’s Parker: Stocks Will Drop 9 Percent by Year-End

Wednesday, 11 Jan 2012 08:11 AM

By Dan Weil

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Most stock market gurus on Wall Street predict moderate gains for equities this year. But Adam Parker, chief equity strategist at Morgan Stanley, begs to differ.

He thinks the Standard & Poor’s 500 Index will end the year at 1,167, down 9.7 percent from Tuesday's close of 1,292. That would represent a decline of more than 7 percent for 2012 as a whole.

And it makes Parker the most bearish of major Wall Street strategists, The Wall Street Journal reports. The average forecast of strategists at 13 major firms is 1,334 for Dec. 31, up 3 percent from Tuesday's close.

But Parker is someone who deserves attention. He was one of the most accurate forecasters for 2011, when he predicted a 1.6 percent slide for the S&P 500, and it turned out unchanged.

He thinks Europe’s debt crisis and weaker-than-expected earnings will hurt U.S. stocks this year.

"You don't want to be contrarian for the sake of being contrarian," Parker tells The Journal. But just like last year, he views his fellow strategists as "too optimistic about earnings."

Parker favors dividend stocks and warns against materials producers and financials.

Brian Wesbury, chief economist of First Trust Advisors, is at the other end of forecasts. He sees a 20 percent gain for stock prices this year, thanks to earnings increases and 3 percent GDP growth.

“I think it’s going to be a gangbuster year for stocks and the economy,” Wesbury tells Yahoo.



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