A trading clerk in the S&P 500 futures pit of the Chicago Mercantile Exchange rests his hands on his head as he watches the price board during mid-day trading in Chicago, Illinois.(Photographer: Tannen Maury/Bloomberg News)

Bernstein Cuts Its S&P 500 Target as Strategists Dial Down Optimism

(Bloomberg) -- Another Wall Street equity bull just succumbed to the latest sell-off.

Sanford C Bernstein & Co. strategist Noah Weisberger, who had initiated a 2019 target for the S&P 500 at 3,150 almost a year ago, trimmed that estimate to 2,950. The new forecast is lower than his prediction for the current year, which at 3,000 looks like a long shot with the index currently trading near 2,600.

Bernstein Cuts Its S&P 500 Target as Strategists Dial Down Optimism

Weisberger is among professional prognosticators whose forecasts have been steamrolled by a market slump pushing the S&P 500 toward its worst quarter in seven years. At the start of 2018, they predicted an 8 percent gain by December. With the benchmark gauge down 3 percent for the year, they’re poised to have overestimated the market’s performance by the most since the 2008 global financial crisis, according to data compiled by Bloomberg.

Some remain unbowed. Jonathan Golub at Credit Suisse has stuck to his 2019 projection of 3,350, the most bullish among strategists tracked by Bloomberg. Others have toned it down like Weisberger. Tony Dwyer at Canaccord Genuity, who previously saw the benchmark ending next year at 3,360, has reduced the forecast to 3,200.

Click here for Bloomberg’s last survey on strategists’ S&P 500 target for 2019

While Weisberger now sees stocks producing lower returns, he shares the view of strategists at Goldman Sachs and JPMorgan that the market’s current concern over a growth slowdown is overdone. Some industries, such as chipmakers and banks, are suffering a valuation discount seen during past recessions. Bernstein’s model suggests a recession is probably 18 to 24 months away.

“We expect 2019 to be a bridge between a period of acceleration, owing in part to a rebound from a near-recession in 2015, to a period of retrenchment ahead,” Weisberger wrote in a note to clients. “The U.S. is entering a slowdown phase. The near-term future is less placid than the recent past, yet not as bad as feared.”

A continued profit expansion will keep the bull market intact, according to Weisberger. He forecasts that the S&P 500 will reach 3,030 by the end of 2020, with corporate earnings increasing to $178 a share from $170 in 2019.

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