Tags: Morgan | Stanley | Stocks | fall

Morgan Stanley Strategist: Stocks Poised to Plunge 15 Percent

By    |   Tuesday, 13 March 2012 08:19 AM

The rally in U.S. stock prices that has taken the market to an almost-four year high will probably end soon, says Adam Parker, equity strategist at Morgan Stanley.

He forecasts that the Standard & Poor’s 500 Index will end the year at 1,167, down about 15 percent from current levels.

“As you look at 2013, there’s a huge fiscal pothole, we don’t think things will be solved in Europe, and there’s a risk that China and emerging markets will slow,” Parker tells Yahoo. That combined with elections in Europe and the United States argues for lower stock prices, he says.

Editor's Note: Wall Street Insider Exposes Death of Main Street America

Investors should consider defensive stocks to take advantage of this trend, principally utilities, healthcare and mega-capitalization technology companies, Parker says.

“We’d like to play in sectors that have more achievable estimates, higher cash balances, higher dividends,” he says. “They tend to be places like utilities and healthcare."

Technology stocks generally wouldn’t be considered defensive. But, “some of the very big ones are still growing fast than the market and are cheaper than the market with much higher cash balances,” Parker says.

Others share his concern about China – a factor weighing on U.S. stocks Monday after news of a huge trade deficit there.

“China is a big question mark,” Erick Maronak, chief investment officer of Victory Capital Management, tells Bloomberg. “What’s their true rate of growth, and how much will they have to ease to get things back on track?”

Editor's Note: Wall Street Insider Exposes Death of Main Street America

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Tuesday, 13 March 2012 08:19 AM
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