The bull market seems to be at a crossroads at the end of 2015. Six straight years of gains have been seen, but as 2015 winds down the Dow Jones Industrial Average (DJIA) has less just three weeks to close. The Dow Jones Industrial Average was down about 1.5% and the S&P 500 Index was down less than 1% as of Tuesday, December 15, 2015.
The real issue is not just that the bull market’s gain has gone on for over six years now. What matters is exactly what may come to be in 2016. Election years are supposed to be good for the markets, but the backdrop of a strong U.S. dollar and weak trends continuing in the prior growth markets of China, Brazil, Russia and elsewhere are weighing down on earnings growth — and that is weighing down Wall Street strategists’ expectations.
Another issue is that weak energy prices and weak oil and gas earnings are hurting the overall earnings power of the energy sector. Ditto for companies tied to metals and mining or other commodities, and companies reliant on high exports.
24/7 Wall St. has compiled many key Wall Street strategist views for 2016. The DJIA has fallen far short of our analyst expectation target to derive a DJIA 19,142 peak in 2015. The S&P 500 Index closed out 2014 at 2,058.90 and was close to 2,044 mid-Tuesday. Keep in mind that some targets are carry-over targets that were made earlier and some of these targets may of course change before year-end or at the onset of 2016.
The universe of strategists was taken from the projections from Bank of America Merrill Lynch, Citigroup, Credit Suisse, Goldman Sachs, JPMorgan, Morgan Stanley, Wells Fargo (midpoint), RBC, BMO, Barclays, Canaccord Genuity, Deutsche Bank, Nomura and UBS. Again, their estimates may change before year-end or in the beginning of 2016.
> S&P 500 target: 2,200
The firm sees a 7% total return for the S&P 500 in 2016, roughly 5% in inflation-adjusted terms. Its strategists believed that Federal Reserve rate hikes are designed to engineer modest growth rather than to put the brakes on a runaway economy, so stocks should do well, particularly those that can raise their dividends and offer investors a rising income stream. Here are the current top 10 Merrill Lynch stock picks for 2016.
Other key strategist targets from Citigroup, Credit Suisse, Goldman Sachs, JPMorgan, Morgan Stanley and a half dozen more are featured below.