Tags: Siegel | Dow 17 | 000 | cliff

Siegel: Dow May Hit 17,000 Next Year if Cliff Is Resolved

Sunday, 18 Nov 2012 03:28 PM

By Dan Weil

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Renowned stock market guru Jeremy Siegel sees a 50 percent chance that the Dow Jones Industrial Average will reach 17,000 next year. A solution to the fiscal cliff before Jan. 1 will put the upward move in motion, he tells CNBC.

An ascent to 17,000 would represent a 35 percent surge from Friday’s finish of 12,588. Siegel, a finance professor at University of Pennsylvania’s Wharton School, predicts that the Dow will definitely end 2013 above 15,000.

What’s holding the market back now is fear of the fiscal cliff (automatic spending cuts and tax increases slated to begin Jan. 1), he says. The Dow is down 8 percent from its Sept. 21 high.

Editor's Note: I Wish I Were Wrong — Economist Laments Being Right. See Interview.

“Any deal that extends [current] tax rates, even if they’re slightly higher, will buy you 500 to 1,000 points on the Dow very quickly,” Siegel maintains.

“There is going to be some sort of deal. That’s going to set the market up, and then next year will exceed everyone’s expectations.”

If he’s wrong, and the government jumps off the cliff, stocks could drop another 5 to 10 percent, Siegel says.

He and others see volatile trading until the cliff issues are resolved.

“Because of the oversold condition of the market, any good news is going to cause a pop,” Walter Hellwig of BB&T Wealth Management tells Bloomberg. “Conversely, anything that’s viewed as negative in the negotiations is going to cause a downward move.”

Editor's Note: I Wish I Were Wrong — Economist Laments Being Right. See Interview.

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