Tags: stocks | Treasury | yields | S&P

Wells Fargo: Stocks Will End Flat This Year

Wednesday, 08 Jan 2014 01:46 PM

By John Morgan

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Gina Martin Adams of Wells Fargo was among Wall Street's biggest bears in 2013, in a year of new market highs, and is sticking with a story of a flat outcome for stocks this year, CNBC reported.

Adams, institutional equity strategist at Wells Fargo, predicts the S&P 500 will end 2014 at 1,850, about where it ended in 2013.

For both years, her prognostications have been deeply affected by what actions the Federal Reserve might take.

"I think the story this year will be one of greater volatility, simply because we are in this environment of chance in monetary policy, and it can go in either direction,” she told CNBC.

Editor's Note: 38 Investments That Profit 96% of the Time (Free Video)

To arrive at her 1,850 year-end price target for 2014, Adams predicted “this Fed is going to be very, very hesitant and kind of keep the reins the best they can on financial market activity.”

Among Adams’ biggest concerns now is the fact Wall Street has become so bullish.

"There's this polarization that has occurred, leaving everyone kind of piled to one side of the boat, and we all know what happens when everyone piles to one side of the boat," Adams said. "So I'd say sentiment is a huge risk right now."

She told CNBC her big miss for 2013, she called a year-end S&P 500 at 1,440, was because she misread the Fed. She believed the central bank would begin tapering its massive asset purchases by the second half of the year instead of waiting, as it did, until January of 2014.

Adams advised caution for stock market investors in the current environment, with her model suggesting the S&P 500 could either advance 300 points or decline 300 points before ending nearly unchanged for the year.

"I don't think that the market is at a point right now where you want to start shorting it. We have a balanced outlook," Adams said. But "you do want to make your selections pretty carefully. Focus on alpha generation at the sector and industry and ticker level."

Bob Doll, Nuveen Asset Management’s chief equity strategist, released his 10 predictions for 2014 this week. Doll predicted the year will see further gains in stocks, but not without some drama and an intra-year 10 percent correction.

“While expectations of high single digit or low double-digit percentage gains are not unreasonable, we also think a noticeable pullback some time during the year is likely to be caused by overbought and deteriorating technical conditions,” Doll predicted. “We would use pullbacks as buying opportunities as most fundamentals continue to improve.”

Among his other 2014 predictions, Doll called for 3 percent growth in GDP and 10-year Treasury yields that approach 3.5 percent.

Editor's Note: 38 Investments That Profit 96% of the Time (Free Video)

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