Do I hear 2,640? 2,700? Brace for an S&P leap as tax plan 'gets people to believe'
By Victor Reklaitis, MarketWatch
Critical information for the U.S. trading day
After the S&P 500's dance up to around 2,512, some strategists are bumping up their price targets for the benchmark, as well as fist-bumping over a potential tax overhaul.
CFRA's team has hiked its 12-month target for the S&P to 2,640 from 2,540, while Morgan Stanley's resident bull is reiterating his forecast of 2,700 and describing tax reform as the "icing on the cake" for this bull market. That implies gains of 5% to 8% for the index, proving our call of the day.
"The possibility of a tax cut remains supportive of equity ownership," says CFRA's Sam Stovall, as he writes about his shop's new target of 2,640. There is also a "lack of attractive alternatives in this rate-tightening environment," he says.
"Challenges to economic growth and share-price appreciation are well-known but not new," Stovall adds. "As a result, we believe the risks are largely reflected in current valuations and underlying support."
Morgan Stanley's Mike Wilson says tax-reform hopes are far from the only driver for this market, but they sure can help.
"Tax is what gets people to believe and finally come in and show some optimism for the most hated bull market in my career," Wilson tells CNBC (https://www.cnbc.com/2017/09/27/morgan-stanley-strategist-says-bear-market-could-start-next-year.html).