Need to Know: Is the S&P’s future healthy after all, and a ‘Broken Friday’ for retailers
Yesterday, this column talked about how a less-optimistic outlook on stocks might be a good thing for investors next year, h/t WSJ MoneyBeat, which pointed to calls for the S&P 500 to return just 5% next year, versus a near 12% gain this year.
Dan Greenhaus, chief strategist at BTIG, doesn’t agree. He said the bias for stock prices this year is higher thanks partly to earnings, global central bank accommodation and a general “risk on” environment. But he’s also he’s less optimistic about next year. And that’s not such a good thing.
“If accurate, we’re not sure it’s a sign of ‘health’ that people (strategists) generally thought to trumpet the stock market are getting less bullish,” says Greenhaus in his latest newsletter.
Scanning the few predictions out there, it’s worth noting that not everyone is so subdued. Federated’s chief investment officer Stephen Auth last week predicted the S&P 500 will reach 2,350 in 2015, which is a 12% rise from his year-end target of 2,100 for 2014. He said the problem with this market is that investors think they need some kind of “rocket booster” to go higher, when really, there are enough reasons to think it will just keep going.
Growth nearing “escape velocity”, rates that will stay low until the back end of 2015, and valuations that should show the S&P trading at around 15.5 times earnings next year are Auth’s reasons to stay upbeat. Check out our chart of the day to get a status update on price/earnings for S&P 500 companies.
Meanwhile, as readers for this column trickle away with Thanksgiving in the headlights, the countdown to Black Friday is on. You know the drill: retailers everywhere trying to dazzle us and lure us into stores. But our call of the day says do not get sucked in — to the stocks, that is. You want to sit out for hours in the cold to buy an iPad? Go crazy. Or make it a party like these guys.
Key market gauges
That record run for stocks could keep going Tuesday. Futures on the Dow YMZ4, +0.12% and the S&P ESZ4, +0.13% are tipping into the black. Asia ADOW, -0.27% meanwhile,had a mixed day, though the Shanghai Composite SHCOMP, +1.37% surged 1.2% and China’s central bank cut the 14-day repurchase rate. The Nikkei 225 NIK, +0.29% added 0.2%. Europe SXXP, +0.46% is rising, though the German DAX DAX, +1.03% has gotten a boost from a rise in GDP. Oil prices CLF5, +0.49% are up ahead of that darned-if-they-do, darned-if-they-don’t OPEC meeting Thursday.
Gold GCZ4, +0.10% is also up, and the dollar USDJPY, -0.01% is just over ¥118 yen.
A third-quarter GDP update is coming at 8:30 a.m. Eastern, and economists expect that number will be shaved to 3.3% from 3.5%. Then at 9 a.m. Eastern, September Case-Shiller and FHFA reports are expected to show home prices aren’t rising as fast as they were earlier in the year. Consumer confidence for November is due at 10 a.m. Eastern.
The quote of the day
“When I grabbed him, the only way I can describe it is I felt like a five-year-old holding Hulk Hogan.” Officer Darren Wilson on trying to subdue Michael Brown. A not-guilty verdict triggered rage and violence in Ferguson, Missouri and protests across the country. And tweets like this:
Razor-thin silver lining: the Ferguson police department already has its Christmas card picture taken care of. pic.twitter.com/WnIdcko35j
— Angus Dwyer (@AngusDwyer) November 25, 2014
There are just a couple of earnings that are coming out today, and Tiffany TIF, +1.06% is one of them. Shares are down a bit in premarket after profit and sales missed estimates.
Home Depot HD, +0.12% is facing at least 44 civil suits related to its widespread data breach earlier this year.