Stock market predictions for 2016 are in. So far, many strategists expect modest performance from the sector in the next 12 months. Let us take a look at what the top firms in the Wall Street have to say.
With higher interest rates up in the horizon, Goldman Sachs Chief U.S. Equity Strategist David Kostin said that the S&P 500 index will continue to tread water in 2016 for a second consecutive year. “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,” he said.
Bank of America Merrill Lynch:
On the other hand, Savita Subramanian, Global Research’s Equity Strategist of BofA Merrill Lynch, has something positive to say about the stock market in the next 12 months. In her blog, she wrote that her company expects modest gains for U.S. large capital stocks. She was also positive that recession has low chances of happening in 2016 even though valuations have normalized from previously low levels and may result to narrow ROI.
UBS’ Equity and Derivatives Strategist Julian Emanuel is cautious in his predictions. He believes that the future of stocks will be determined by the market’s reaction to interest rate hikes. In a note to clients, Emmanuel and his team wrote that if earnings continue to improve, barring an unforeseen external shock or recession would make 2016 a positive year for US equities. However, continuous volatility should be expected, so investors should not let down their guard and continue to adjust their strategies.
Barclays’ U.S. equity strategist Jonathan Glionna offers a more optimistic prediction though. He and his team believe that a hike in US interest rates will lead to a stronger U.S. dollar, which as a result will increase earnings per share although ROI will remain subdued. “We forecast 4% EPS growth and a 5% gain for the S&P 500,” he wrote.
The experts at Wall Street have spoken up. So what will your investment strategy be in 2016?