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Post-Fed Predictions: A 14,000 Dow?

Tuesday, 12 Dec 2006 | 3:15 PM ET

The Federal Reserve left its benchmark interest rate unchanged at 5.25%--but left the door open for increases--if inflation persists. CNBC's Erin Burnett had two investment strategists, Bob Doll and Charles Reinhard, on “Street Signs” today. Both men gave their post-Fed meeting predictions for 2007.

Reinhard’s the director of portfolio strategy at Lehman Brothers Asset Management. He’s predicting a 14,000 Dow and 1,600 S&P for next year – as long as the Fed holds on rate changes or makes a cut.

Bernanke's Bull Market
The markets have been flying since June's Fed rate cut. CNBC's Erin Burnett takes a look at whether it will continue into 2007, with Charles Reinhard, Lehman Brothers Asset Mgmt. Dir. of Portfolio Strategy, and Robert Doll, BlackRock Vice Chmn.

Doll, the vice chairman and global chief investment officer at Blackrock, is less enthusiastic about 2007. A slowing economy and smaller earnings growth will keep the Dow closer to 13,300.

Both analysts agreed that energy is worth buying into. The stocks are cheap, and the supply-demand problem isn’t solved yet. Cold weather is sure to boost shares prices as well.

Doll also thinks health care is a strong pick for 2007. The November U.S. elections threw a bit of cold water on these stocks, but they have the ability to grow despite a slowing economy. Dolls says there’s a chance this sector could see double-digit growth next year.

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  • Brian Sullivan is co-anchor of CNBC's "Street Signs."

  • Co-anchor of CNBC's "Street Signs," Amanda Drury is based at the network's global headquarters in Englewood Cliffs, N.J.