Economist Marc Faber, publisher of The Gloom, Boom and Doom report, has downgraded his earlier forecast for the S&P 500 to 1,150.
"Unlike many strategists, I don’t think we are going to make a new high," Faber tells CNBC. The S&P 500 closed Thursday at 1,320.64.
"I think the S&P or the overall market in the U.S. will close 2011 at about this level or lower — not higher as every strategist is predicting."
"I think we have seen the highs for this year, let us put it this way.”
“I think we can rally to around 1,330 on the S&P now, but not make a new high above the 1,370 highs, which we saw in May,” he said. “And then, in my view, we would be going down to maybe 1,150 on the S&P.”
Faber believes that the S&P will bottom between late August through October, an opinion supported by historical data that show very low volumes of incoming funds during that period.
“I think the second half of August, September-October will be rough months,” Faber warned, adding that slowing economies in the U.S., Europe and China will adversely affect bite into commodities prices as well.
According to istockanalyst.com, the current commodity price correction will serve as a boost to the economy and corporations, particularly because of the lower spot price of oil.
In addition, lower agricultural and precious metal prices will help corporate margins over the near term, where there should be a pronounced level of earnings growth.
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