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Bull Run for Stocks in 2013: Citigroup's Levkovich

Monday, 24 Dec 2012 | 11:59 AM ET
Citi Strategist Shares 2013 Predictions
Despite worries about the fiscal cliff, Citigroup sees market upside for 2013. Tobias Levkovich, Citi, weighs in.

So long as Washington doesn't flub a solution to the nation's fiscal problems, the S&P 500 should log a 13 percent gain in 2013, Citigroup's chief U.S. equity strategist, Tobias Levkovich, told CNBC's "Squawk on the Street" on Monday.

"If all we're doing is going past December 31 and have to do something in the first couple of weeks in January, I don't think it rips apart the opportunity for next year," said the strategist on the timing for a potential deal to avert the "fiscal cliff" of automatic tax hikes and spending cuts.

But Levkovich warned if politicians can't reach a consensus to respond to the fiscal cliff, "it's a huge risk to the market."

The Citigroup strategist has a target of 1615 on the S&P 500 for the end of next year. Levkovich expects the U.S. stock market to enter into a new secular bull market, with the S&P reaching new highs.

(Read More: Boldest Predictions 2013)

He said a rebound in housing, the energy boom, mobility in technology and the manufacturing renaissance will all help propel the stock market higher.

But with the strategist predicting only 5 percent earnings growth next year, the valuation multiple for the S&P will have to rise to reach his year-end target.

"You're going to need some activity in Washington to address the bigger issues, the fiscal reform issues, not just getting past the fiscal cliff" for stock multiples to expand, Levkovich said.

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