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Stocks could surge by 17 percent — if tax reform passes

He entered the year as Wall Street's biggest bull.

And now, Canaccord Genuity's Tony Dwyer could claim that distinction again in 2018.

It all hinges on the tax reform package.

If Washington can pass it, the firm's chief market strategist predicts the S&P 500 could surge 17 percent from current levels.

"You're looking at over 3100 on the S&P 500," Dwyer said Wednesday on CNBC's "Trading Nation."

His potential year-end target is based on a study conducted for his firm by Thomson Reuters.

Dwyer said a lowered corporate tax rate to 20 percent from 35 percent would add 10.5 percent to his current S&P 500 earnings per share estimate. In turn, it would drive stocks further into record territory.

He acknowledges his current S&P 2018 price target of 2,800, which reflects strong fundamentals and a synchronized growing global economy, is conservative right now. That figure would be about a 6 percent gain from Wednesday's close.

"It's not whether you have another leg higher. Corporate taxes may give you an extra boost to that leg," Dwyer said.

Yet he's not discounting the risk of a stock market pullback along the way.

"We're in for that kind of correction where it's just small, but because of the lack of volatility, it feels really big," he said. "The market is kind of ripe for one of those 3 percenters that feels like 30 percent."

Dwyer said it's vital for investors not to get spooked by a sell-off — reiterating that stocks are far from a peak in the cycle.

"Ultimately, it is to be bought. I want to be crystal clear on this," Dwyer said.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Brian Sullivan

Brian Sullivan is co-anchor of CNBC's "Power Lunch" (M-F,1PM-3PM ET), one of the network's longest running programs, as well as the host of the daily investing program "Trading Nation." He is also a frequent guest on MSNBC's "Morning Joe" and other NBC properties.

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