Economists' consensus has it that the Federal Reserve will begin raising interest rates around mid-year, and many stock-market participants expect the tightening will put an end to the six-year bull market for equities.
But not everyone sees it that way.
"There's this obsession with the potential headwinds from the Fed," Jonathan Golub, chief U.S. market strategist at RBC Capital Markets, told
The Wall Street Journal. "But we're talking about very good stock-market returns for two to three years from now."
The S&P 500 index generated a return of 13.7 percent last year, including dividends, and 32.4 percent in 2013.
He predicts the S&P 500 will rise 13 percent this year to 2,325.
Golub believes the U.S. economy will continue to grow causing stocks to rise. "The U.S. is going to be a positive outlier, not only for the next year, but for the next decade," he said.
As for the impact of Fed rate increases on stocks, money manager Ben Carlson found that in 12 of the last 14 periods that saw sustained rate hikes, going back to 1958, the S&P 500 index actually gained, he writes on his website,
A Wealth of Common Sense.
The average return was a stellar 20 percent, compared with 2 percent for bonds.
The likely reason why stocks perform so well — and bonds not so well — is that Fed tightening is often accompanied by strong economic growth. And such growth, of course, is helpful to stocks. The Fed's worry is that the growth will cause excessive inflation.
Top stock strategists forecast on average that the S&P 500 will climb 8.2 percent this year, according to a survey of banks and money-management firms polled by Birinyi Associates, The Journal reports.
Economic growth and strong earnings will fuel the gains, the strategists say.
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