By Victor Reklaitis, MarketWatch
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 .
But the Morgan Stanley strategist — dubbed “Wall Street’s biggest bull” — also is predicting a bust next year for the S&P after it booms. “We’re late cycle,” he warns.
Key market gauges
Futures for the S&P 500 are neither busting nor booming at the moment, but rather pointing to a modest drop at the open. Dow and Nasdaq-100 futures are also moderately lower.
That’s after the S&P /zigman2/quotes/210599714/realtime SPX -1.05% hit an intraday record at 2,511.75 yesterday, then gave up some gains to finish just below last week’s all-time closing high. The Dow /zigman2/quotes/210598065/realtime DJIA -0.78% and Nasdaq Composite /zigman2/quotes/210598365/realtime COMP -1.79% also ended just an algo’s sneeze away from fresh record closes.
Europe /zigman2/quotes/210599654/delayed XX:SXXP -0.49% and Asia have shown mixed action. Oil is gaining, gold is little changed, and the dollar index /zigman2/quotes/210598269/delayed DXY -0.53% is pulling back.
See the Market Snapshot column for the latest action.
12 years ago — that is the last time the S&P 500 went a year without having a daily move of 2% or more. So far this year, the index is on track to match that placid 2005 performance, as the chart above shows (h/t Daily Shot ).
President Trump’s plan promises huge tax cuts, but big questions remain .