Talk about getting off on the wrong foot.
Stock-market guru Jeremy Siegel, professor of finance at the University of Pennsylvania, says that just because U.S. stocks had a horrible first day of trading to start the new year, don’t fret over the rest of the year.
The Wharton finance professor and economist predicts that U.S. stocks can still rise 8 to 10 percent this year. "I don't think it's going to be all that bad," he told CNBC
of China's effect on markets.
The Dow Jones Industrial Average got off to its worst start to a year since 1932. Investors were reacting to negative manufacturing data from Asia and a sell-off in Chinese stocks. Confidence in the U.S. economy prompted Fed officials to raise interest rates last month for the first time in nearly 10 years, Bloomberg
The S&P 500 Index fell 1.5 percent to 2,012.66 at 4 p.m. in New York, after sliding as much as 2.7 percent as equities pared losses in the final 30 minutes of trading. The Dow Jones Industrial Average lost 276.09 points, or 1.6 percent, to 17,148.94. The Nasdaq Composite Index dropped 2.1 percent. The Chicago Board Options Exchange Volatility Index jumped 14 percent, the most in three weeks. About 8.5 billion shares traded hands on U.S. exchanges, 21 percent above the three-month average.
Siegel believes that, while the U.S. economy looks "better than a lot of people fear," global factors may deter the Federal Reserve from hiking interest rates as much as previously signaled. While some central bank officials have outlined an intent to raise rates four times this year, Siegel contended it will only happen twice, propping up markets.
But not all financial experts are as optimistic as Siegel, one of Wall Street's most notable bulls.
To be sure, Marc Faber says the U.S. is at the start of an economic recession, clashing with Federal Reserve Chair Janet Yellen’s view that things are improving.
“Ten-year U.S. Treasurys are quite attractive because of my outlook for a weakening economy,” Faber, the publisher of the Gloom, Boom & Doom Report, said in a recent interview with Bloomberg.
“I believe that we’re already entering a recession in the United States” and U.S. stocks will fall in 2016, he said.
Yellen raised interest rates last month for the first time in almost a decade and said Americans should take the decision as a sign of confidence in the U.S. economy. Analysts differ over whether the Fed’s decision to increase its benchmark came at the right time because the inflation rate is stuck near zero even as gross domestic product expands.
(Newsmax wire services contributed to this report).
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