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| More strategists join the growing '1700 Club' |
Today, seven top stock strategists have joined the club, whose membership requirements include being bullish on stocks and owning a 2013 year-end price target of 1700-plus for the benchmark index. All the founding members have boosted prior lower targets to keep pace with the sizzling stock market of 2013.
The club's first member was Tony Dwyer, strategist at Canaccord Genuity. Back in March, he raised his target to 1760 from 1650. (In late July, he expressed confidence in his 2014 target of 1955, a 16% leap from Wednesday's close of 1691, after "busting" some market "myths," including one that says the market is "already up too much," and "it is too late to buy.") Dwyer remains bullish, as he thinks economic growth and inflation numbers are too low for the Fed to start pulling back on its market-friendly bond-buying program this year.
The club's most-bullish member, however, is Tom Lee. On July 26, JPMorgan's chief U.S. equity strategist raised his market outlook for the second time this year, bumping up his target to 1775 from 1715. That equates to further gains of 5%.
Other Wall Street firms that have joined the 1700 Club include Bank of America Merrill Lynch, Goldman Sachs, Stifel Nicolaus, Credit Suisse and Oppenheimer. Of the 17 firms whose S&P 500 price targets are tracked by Bloomberg, 15 have boosted their market outlooks this year, but a dozen still have current targets below 1700.
Lee told USA TODAY that his bullish call is "less about the market's momentum" and "more about the economy's momentum."
Says Lee: "We are seeing signs of a U.S. acceleration." He cites as evidence a better-than-expected July reading on U.S. manufacturing, a drop in the number of Americans filing for weekly unemployment benefits and a decline in the unemployment rate to 7.4%, its lowest level since December 2008.
What could spoil the party?
A sharper-than-expected slowdown in China and a "policy" mistake this fall involving U.S. lawmakers, he says. But the bull won't be killed off until the next recession, Lee adds, which he sees few signs of now.
One Wall Street strategist who has no interest in joining the 1700 Club is Gina Martin Adams, equity strategist at Wells Fargo Securities. Her year-end target for the S&P 500 is 1440, about 15% below current levels and the lowest on the street. Her models show an economy that simply is not picking up enough steam to enable Corporate America to make as much money later this year and next as bulls believe. With Fed stimulus set to be reduced in coming months, the economy and corporate earnings will face a fresh headwind.
