How Wall Street predicts for 2016 stock market# Stock
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Here's what Wall Street is predicting for stock market in 2016
Akin Oyedele
Nov. 28, 2015, 6:00 AM 173,206 8
Most of the big stock-market forecasts for 2016 are in.
Wall Street steadily lowered its expectations for the market as 2015
unfolded.
On Thursday December 24, the S&P 500 closed near 2,061. Last December, the
median year-end target for 2015 among the top strategists was higher at 2,
213 according to Bloomberg.
Based on the forecasts we've received so far, many of the most bullish
strategists expect that 2016 will be another modest year for the market.
Uncertainty about how markets respond to the first interest rate hike in
nine years, commodity price weakness, and slow global growth are some of the
things strategists have identified as potential headwinds for stocks and
earnings.
We've rounded up the calls from the top firms on Wall Street that we have so
far.
We also included their original 2015 price targets, so you can see where the
strategists stood a year ago compared to where the market is now. Many of
these were revised as the year unfolded.
View As: One Page Slides
Goldman Sachs
Goldman Sachs
Goldman Sachs
2016 year-end target: 2,100
2016 EPS forecast: $120
2015 year-end target: 2,100
Comment: "We forecast the S&P 500 index will tread water for a second
consecutive year in 2016," wrote David Kostin. "Our year-end 2016 target of
2100 represents a 1% price gain from the current index level (2089), which
itself is just 1% above the year-end 2014 level of 2059."
Source: Goldman Sachs
Bank of America Merrill Lynch
Bank of America Merrill Lynch
BAML
2016 year-end target: 2,200
2016 EPS forecast: $120
2015 year-end target: 2,200
Comment: "We expect modest gains for US large cap stocks in 2016: the
likelihood of a recession in the next 12 months is low in our view, but
valuations have normalized from previously low levels and narrowing returns
are to be expected," wrote Savita Subramanian.
Source: Bank of America Merrill Lynch
UBS
UBS
UBS
2016 year-end target: 2,275
2016 EPS forecast: $126
2015 year-end target: 2,225
Comment: "Barring an unforeseen external shock or a recession, if earnings
continue to improve, 2016 should be a positive year for US equities," Julian
Emanuel wrote. "Regardless, we continue to expect further volatility —
which in essence means higher risk, both upside and downside."
Source: UBS
Credit Suisse
2016 mid-year target: 2,150
2016 forecast: 6.8% growth
2015 year-end target: 2,225
Comment: "We think that we are at the later stages of the equity bull market
and see increasing headwinds for equities related to valuations, an
uncertain macro environment, bottom-up disruptions, weak earnings momentum,
and falling market breadth," Andrew Garthwaite wrote.
Source: Credit Suisse
Barclays
Barclays
Barclays
2016 year-end target: 2,200
2016 EPS forecast: 4% growth
2015 year-end target: 2,100
Comment: "Our macro narrative is simple, if obvious," Jonathan Glionna said.
"We believe U.S. interest rates will go up leading to a stronger U.S.
dollar. This should cause earnings per share growth and returns to remain
subdued. We forecast 4% EPS growth and a 5% gain for the S&P 500."
Source: Barclays
RBC Capital Markets
RBC Capital Markets
RBC
2016 year-end target: 2,300
2016 EPS forecast: $128
2015 year-end target: 2,325
Comment: "2015 was marked by falling oil prices, a diminishing global growth
outlook, and flat rates," Jonathan Golub wrote. "Our constructive 2016
outlook is predicated upon stabilizing commodity prices, and an
incrementally higher dollar and rates. All of this should result in a
substantially higher earnings trajectory as well as a modest re-rating of
stocks."
Source: RBC Capital Markets
BMO Capital Markets
BMO Capital Markets
BMO Capital Markets
2016 year-end target: 2,100
2016 EPS forecast: $130
2015 year-end target: 2,250
Comment: "We believe the S&P 500 will likely suffer its first calendar year
loss since 2008," wrote Brian Belski. "However, we continue to believe the
longer-term outlook for US stocks remains bright, and we remain confident
with our call that US stocks are in the midst of a secular bull market."
Source: BMO Capital Markets
Deutsche Bank
2016 year-end target: 2,250-2,300
2016 EPS forecast: $125
2015 year-end target: 2,150
Comment: "We reduce 2016E S&P EPS from $128 to $125," wrote David Bianco. "
We're unsure of the tone of language appropriate to describe this reduction.
Slashing or even cutting is too harsh as our new estimate is merely 2.5%
lower. This trimming shouldn't surprise investors given recent commodity and
currency markets."
Source: Deutsche Bank
Morgan Stanley
2016 year-end target: 2,175
2016 EPS forecast: $125.9
2015 year-end target: 2,200
Comment: "We are viewing this as a mid-expansion period where equity returns
are not strong (much like 2015 so far), instead of the end of the expansion
," Morgan Stanley strategists wrote. "Should investors regain confidence
that the US economy and corporate behaviors will not lead to a substantial
earnings correction, we think the market could begin a more meaningful
acceleration path."
Source: Morgan Stanley
Fundstrat
2016 year-end target: 2,325
2016 EPS forecast: $127
2015 year-end target: 2,325
Comment: "We believe there is potential for positive surprises in 2016.
Global growth re-accelerates in 2016 (3.0% in ’15 to 3.2-3.3%) as US growth
strengthens, EM stabilizes and Eurozone further firms: US growth should
improve on heels of better consumer income, gov’t adding to growth (
especially election year), less drag from USD," Tom Lee wrote.
Source: Fundstrat
Akin Oyedele
Nov. 28, 2015, 6:00 AM 173,206 8
Most of the big stock-market forecasts for 2016 are in.
Wall Street steadily lowered its expectations for the market as 2015
unfolded.
On Thursday December 24, the S&P 500 closed near 2,061. Last December, the
median year-end target for 2015 among the top strategists was higher at 2,
213 according to Bloomberg.
Based on the forecasts we've received so far, many of the most bullish
strategists expect that 2016 will be another modest year for the market.
Uncertainty about how markets respond to the first interest rate hike in
nine years, commodity price weakness, and slow global growth are some of the
things strategists have identified as potential headwinds for stocks and
earnings.
We've rounded up the calls from the top firms on Wall Street that we have so
far.
We also included their original 2015 price targets, so you can see where the
strategists stood a year ago compared to where the market is now. Many of
these were revised as the year unfolded.
View As: One Page Slides
Goldman Sachs
Goldman Sachs
Goldman Sachs
2016 year-end target: 2,100
2016 EPS forecast: $120
2015 year-end target: 2,100
Comment: "We forecast the S&P 500 index will tread water for a second
consecutive year in 2016," wrote David Kostin. "Our year-end 2016 target of
2100 represents a 1% price gain from the current index level (2089), which
itself is just 1% above the year-end 2014 level of 2059."
Source: Goldman Sachs
Bank of America Merrill Lynch
Bank of America Merrill Lynch
BAML
2016 year-end target: 2,200
2016 EPS forecast: $120
2015 year-end target: 2,200
Comment: "We expect modest gains for US large cap stocks in 2016: the
likelihood of a recession in the next 12 months is low in our view, but
valuations have normalized from previously low levels and narrowing returns
are to be expected," wrote Savita Subramanian.
Source: Bank of America Merrill Lynch
UBS
UBS
UBS
2016 year-end target: 2,275
2016 EPS forecast: $126
2015 year-end target: 2,225
Comment: "Barring an unforeseen external shock or a recession, if earnings
continue to improve, 2016 should be a positive year for US equities," Julian
Emanuel wrote. "Regardless, we continue to expect further volatility —
which in essence means higher risk, both upside and downside."
Source: UBS
Credit Suisse
2016 mid-year target: 2,150
2016 forecast: 6.8% growth
2015 year-end target: 2,225
Comment: "We think that we are at the later stages of the equity bull market
and see increasing headwinds for equities related to valuations, an
uncertain macro environment, bottom-up disruptions, weak earnings momentum,
and falling market breadth," Andrew Garthwaite wrote.
Source: Credit Suisse
Barclays
Barclays
Barclays
2016 year-end target: 2,200
2016 EPS forecast: 4% growth
2015 year-end target: 2,100
Comment: "Our macro narrative is simple, if obvious," Jonathan Glionna said.
"We believe U.S. interest rates will go up leading to a stronger U.S.
dollar. This should cause earnings per share growth and returns to remain
subdued. We forecast 4% EPS growth and a 5% gain for the S&P 500."
Source: Barclays
RBC Capital Markets
RBC Capital Markets
RBC
2016 year-end target: 2,300
2016 EPS forecast: $128
2015 year-end target: 2,325
Comment: "2015 was marked by falling oil prices, a diminishing global growth
outlook, and flat rates," Jonathan Golub wrote. "Our constructive 2016
outlook is predicated upon stabilizing commodity prices, and an
incrementally higher dollar and rates. All of this should result in a
substantially higher earnings trajectory as well as a modest re-rating of
stocks."
Source: RBC Capital Markets
BMO Capital Markets
BMO Capital Markets
BMO Capital Markets
2016 year-end target: 2,100
2016 EPS forecast: $130
2015 year-end target: 2,250
Comment: "We believe the S&P 500 will likely suffer its first calendar year
loss since 2008," wrote Brian Belski. "However, we continue to believe the
longer-term outlook for US stocks remains bright, and we remain confident
with our call that US stocks are in the midst of a secular bull market."
Source: BMO Capital Markets
Deutsche Bank
2016 year-end target: 2,250-2,300
2016 EPS forecast: $125
2015 year-end target: 2,150
Comment: "We reduce 2016E S&P EPS from $128 to $125," wrote David Bianco. "
We're unsure of the tone of language appropriate to describe this reduction.
Slashing or even cutting is too harsh as our new estimate is merely 2.5%
lower. This trimming shouldn't surprise investors given recent commodity and
currency markets."
Source: Deutsche Bank
Morgan Stanley
2016 year-end target: 2,175
2016 EPS forecast: $125.9
2015 year-end target: 2,200
Comment: "We are viewing this as a mid-expansion period where equity returns
are not strong (much like 2015 so far), instead of the end of the expansion
," Morgan Stanley strategists wrote. "Should investors regain confidence
that the US economy and corporate behaviors will not lead to a substantial
earnings correction, we think the market could begin a more meaningful
acceleration path."
Source: Morgan Stanley
Fundstrat
2016 year-end target: 2,325
2016 EPS forecast: $127
2015 year-end target: 2,325
Comment: "We believe there is potential for positive surprises in 2016.
Global growth re-accelerates in 2016 (3.0% in ’15 to 3.2-3.3%) as US growth
strengthens, EM stabilizes and Eurozone further firms: US growth should
improve on heels of better consumer income, gov’t adding to growth (
especially election year), less drag from USD," Tom Lee wrote.
Source: Fundstrat