The stock market started off the year with a bang, rising 6 percent year-to-date at its peak Thursday. But don’t expect that rally to continue, two major stock strategists tell The New York Times.
Economic growth and corporate earnings may not be strong enough to power additional gains.
At its zenith last week, the Standard & Poor’s 500 Index hit 1,333. That already surpassed the 1,330 year-end target held by Jim McDonald, chief investment strategist for Northern Trust.
But he hasn’t revised his forecast. “The market may have front-ended its returns for the entire year,” McDonald tells The Times.
Jeff Applegate, chief investment officer at Morgan Stanley, is no raging bull either. “Europe and the United States will slip into recession this year,” he predicts to The Times. That’s not exactly a recipe for a run-up in stocks.
Indeed Morgan Stanley has recommended that clients trim back their stock allocations. “We think there’s risk of more downside,” Applegate says.
McDonald and Applegate already have been proven right in the last three trading sessions. The S&P 500 declined 2 percent from its Thursday high through midday Monday.
Concerns about Greece are hurting stocks Monday. “The low hanging fruit has been picked and now it’s a more difficult slog to get substantive changes in Europe,” Kevin Caron, a market strategist at Stifel Nicolaus, tells Bloomberg.
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