Key Words: Longtime market bull warns strong earnings won’t keep 2018 from disappointing

‘This market is going to struggle this year… as good earnings collide with what I think will be higher interest rates both by the Fed and in the Treasury market.’

That’s Wharton professor Jeremy Siegel, long known as a stock-market bull, reiterating his “neutral” stance on what he sees as a “flat to slightly upward tilting” year ahead.

He told CNBC in an interview this week that he believes the Fed’s plan to raise rates and shrink billions of dollars in Treasury holdings will keep a lid on any upward momentum.

Siegel said “3.25% on the 10-year will give stocks a pause in 2018” and that the most investors could realistically hope for is a 10% rally in the market, compared with a 25% surge on the Dow last year.

“These gains that people are talking about — 10% to 15% a year this year and maybe next year — I just don’t think they’re going to be realized,” he said.

Earnings season has been fairly strong so far, and expectations call for growth of 17.3% for the period, the fastest rate since 2011. Siegel, however, explains that the benefits from this year’s “front loaded” tax-cut will wind down.

“Firms are actually going to lose depreciation deductions in future years. So, it’s going to be great in 2018,” he said. “2019 — you’re going to have to have a growing economy to generate earnings gains. It’s not going to be anywhere near as easy as it was this year.”

That doesn’t mean Siegel believes you should sell. “I’m not predicting a bear market,” he said. “Valuations are still very attractive for long-term investors.”

On Tuesday, the Dow Jones Industrial Average DJIA, +1.03%  , Nasdaq COMP, +1.59%  and S&P 500 index SPX, +1.04%  were all riding higher with earnings remaining a driving factor.

Watch Siegel’s interview:

Filed in: Top News Tags: 

You might like:

CryptoWatch: Crypto market cap hits 4-week high, but intraday volatility remains CryptoWatch: Crypto market cap hits 4-week high, but intraday volatility remains
Need to Know: Watch for ‘violent selloff’ to thwart Saudis’ wish for $100 oil Need to Know: Watch for ‘violent selloff’ to thwart Saudis’ wish for $100 oil
Young people apparently don’t realize these popular ‘crème brulée’ e-cigarettes contain nicotine Young people apparently don’t realize these popular ‘crème brulée’ e-cigarettes contain nicotine
Economic Report: Philly Fed manufacturing index points to continued growth in April Economic Report: Philly Fed manufacturing index points to continued growth in April
Bond Report: 10-year Treasury yield extends climb as earnings lift appetite for stocks Bond Report: 10-year Treasury yield extends climb as earnings lift appetite for stocks
Economic Report: Jobless claims fall slightly to 232,000 in late April Economic Report: Jobless claims fall slightly to 232,000 in late April
Currencies: Dollar searches for catalyst as risk sentiment improves Currencies: Dollar searches for catalyst as risk sentiment improves
America’s fastest-growing plastic surgery procedure takes place below the belt America’s fastest-growing plastic surgery procedure takes place below the belt

Leave a Reply

Submit Comment
© 2018 Stock Investors News. All rights reserved. XHTML / CSS Valid.