Market Insider

How much strategists expect stocks to rise in 2017

Closing Bell Exchange: Trump bump or dump?

U.S. stocks can rise about 2 percent more this year, according to CNBC's latest Market Strategist Survey.

The median forecast of 16 strategists surveyed in the last two weeks is 2,368, or 2.2 percent above Friday's close of 2,316.

However, about a third of respondents had a year-end price target of 2,300, and the median forecast of 2,335 is 0.8 percent above Friday's close.

Deutsche Bank's Binky Chadha became the most bullish analyst on Wall Street Thursday with his 2,600 year-end target for the S&P 500. That represents just over a 12 percent gain from Friday's close.

Previously, Deutsche's official forecast of 2,350 had been set by David Bianco, who last month moved on to Deutsche Asset Management to become chief investment strategist for the Americas and head of equities.

Fundstrat's Tom Lee is the most bearish firm with a 2,275 price target.

Aside from the impact of strategist changes, the 2017 S&P 500 targets remained the same for strategists surveyed late last year. The first-quarter survey included two other strategists, one from BNY Mellon Wealth Management and the other from Canaccord Genuity. Barclays was unavailable to provide an update as of this writing.

*Middle of a 2,2302,330 range

Survey results released in mid-December 2016 showed the median of 13 strategists' price target was 2,325.

U.S. stocks have soared since President Donald Trump won the election as traders bet on increased growth from promises of tax cuts, infrastructure spending and deregulation.

The S&P 500 has climbed nearly 8 percent since the election and is up about 3.5 percent for the year so far. The index rose 9.5 percent last year after ending 2015 less than 1 percent lower for the year.

*Middle of a 2,2302,330 range

Ahead of the Jan. 20 inauguration, analysts had said a major risk for stocks is whether Trump can quickly implement his proposals.

Stocks rallied to record highs in the last week on Trump's remarks that a "phenomenal" tax reform plan will come within weeks. The president previously proposed cutting the corporate tax rate from 35 percent to 15 percent, along with a one-time 10 percent tax rate on repatriated corporate profits now held offshore.

Goldman Sachs' outlook for 2017 from November describes potential stock market action as a "hope" trade that sees the S&P 500 peaking at 2,400 in the first quarter, before falling 100 points to 2,300 by year end in a "fear" trade on higher inflation and Federal Reserve rate hikes.

Other strategists see stocks continuing to climb past their mid-year targets.

Citi's Tobias Levkovich expects the S&P 500 could trade at 2,250 in the middle of next year before ending the year at 2,325.

In addition to their official year-end target for the S&P 500, several firms gave a wide range of possible stock market scenarios. Bank of America Merrill Lynch's Savita Subramanian said the index could potentially rise as high as 2,700 or fall to 1,600 — her base case is for the S&P to end next year at 2,300.

"With 2016 on pace to be the weakest year of global growth since 2009, it wouldn't take much to get improvement next year, with potential for extra oomph from stimulus and tax reform," Subramanian said in a late November note.

But "if policymakers cannot deliver growth, the markets will be disappointed given the multiple expansion we have seen in stimulus beneficiaries," she said. "Buybacks are slowing, cost-cutting is reversing and elevated valuations and leverage ratios along with weak sales growth paint a grim picture."

Jonathan Glionna at Barclays said the S&P could climb as high as 2,500 and earnings per share could grow as much as 12 percent if Trump's plans are implemented. His base case is slightly lower — at 2,400 — but potential downside is much lower at 2,000.

Morgan Stanley's Adam Parker expects the S&P 500 to hit 2,300 over the next 12 months, but it could fall as low as 1,625 in a worst case scenario, or rise as high as 3,050.

Santoli: Clearly another turn of the dial for this reflation trade