In short: S&P set to top 2,000 in 2014 or 2015
Federated’s equity team has not changed its longstanding 1,660 year-end target on the S&P, although our thinking is the market could end the year somewhat higher. Longer-term, however, we expect the S&P will breach 2000 sometime in 2014 or 2015 because, 1) As we’ve been saying since 2011, we think equities are in a long-term secular bull market; 2) Each aftershock from the 2008-09 “category 10” financial earthquake has proven smaller than the previous one (the August 2011 euro/U.S. debt ceiling “crisis,” the summer of 2012 Spain/Italy crisis, the winter 2013 Cyprus debacle, etc.), and we think the same will apply to the latest market concern about the timing of a Fed tapering; and 3) The Fed is determined to push asset prices higher and will only start tapering once the economy is steaming ahead—maybe sometime in 2014 or late 2013. And when the Fed does act, we expect stocks to move higher on the improved growth outlook, combined with the continuously receding tail risk concerns.