CNBC Stock Blog

S&P at 1050-1200 Trading Range Next Year: Strategist

Stocks climbed Wednesday after a report showed new-home sales rose more than expected. Rod Smyth, chief investment strategist at Riverfront Investment Group, and Fritz Meyer, senior market strategist at Invesco AIM, discussed their market outlooks.

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“This is an economy that’s not great for Main Street because it’s not creating jobs, but it’s wonderful for Wall Street, because while we have no V-shape recovery in the economy, we have a V-shape recovery in profits,” Smyth told CNBC.

“In all likelihood, the earnings for the S&P are going to be somewhere between $70 to $80 next year," he said.

"Put a 15 multiple on that, which is long run average and way below the level of the last 10 years. And you get a 1,050 to 1,200 trading range.”

Smyth said while the U.S. may not be experiencing a V-shaped economic recovery, many countries besides the developing ones are starting to think of raising rates.

In the meantime, Meyer said the fundamentals do justify a higher stock market and he believes that the economic recovery will be gradual.

“I would not want to see a second stimulus,” he said. “The economy on its own has always recovered based on pent-up demand and that’s what we’re seeing—we’re seeing improvement in retail data.”

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No immediate information was available for Meyer or Smyth.