Tags: bear | bullish | stock | S&P 500

Not All Bears Have Turned Bullish in Stock Market

By Dan Weil   |   Thursday, 04 Apr 2013 07:51 AM

While many stock strategists have joined the bandwagon for equities as the market rolls merrily to record highs, some of their colleagues remain bearish.

The Wall Street Journal cites three of them.

Gina Martin Adams, senior analyst at Wells Fargo Securities, says that stocks could slip in the second half of the year, as investors begin worrying about the Federal Reserve curbing its quantitative easing.

Editor's Note:
Billionaires Dump Stocks. Prepare for the Unthinkable.

"While we're all hot to trot about 'don't fight the Fed' now, that mantra works in both directions," she tells The Journal. "Don't fight the Fed in the opposite direction when it starts tightening."

According to Adams, the S&P 500 has averaged an 8 percent drop in the six months before the Fed tightens historically. "Stocks usually sniff out the coming change to Fed policy before the policy change occurs," she notes.

Adams sees the Standard & Poor’s 500 Index ending the year at 1,390, down 11 percent from Tuesday’s close of 1,570

Jonathan Golub, chief U.S. equity strategist at UBS, doesn’t believe in the rally, because he thinks it stems from Fed easing rather than fundamentals. He has a 1,425 year-end forecast for the S&P 500.

"This is really a story where the fundamentals, which may be modestly better, are not driving the market," Golub tells The Journal.

Barry Knapp, chief U.S. equity strategist at Barclays, is just a bit negative, with a year-end target of 1,525. He thinks the economy will repeat its pattern of the last three years, when it began to stumble in the second quarter.

"Markets have blown past what fundamentals dictate they should be doing," he says.

As for the bulls, Sam Stovall, chief equity strategist at S&P Capital IQ is one of them.

"Whether you look forward, or to the past, in general, it says we are trading at a discount" to historical price-earnings ratios, he tells Yahoo.

Stovall predicts the Standard & Poor’s 500 Index will reach 1,670 within a year, up 6 percent increase from Tuesday’s close. Stovall sees the S&P 500 ending the year at about 1,620 to 1,630.

Editor's Note: Billionaires Dump Stocks. Prepare for the Unthinkable.

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