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After the worst start to a year ever, the stock market surged to new highs in 2016.
All the major indexes rebounded to records and defied the doomsday forecasts that preceded events like Brexit and President-elect Donald Trump's election.
For next year, no strategist at a top Wall Street firm forecasts that the bull market will end. Many expect America's largest companies to return to earnings growth, and to see other benefits from Trump's promises to cut taxes and ease regulations.
Near this time last year, the median year-end forecast for the benchmark S&P 500 index was 2,178 according to Bloomberg. On Thursday, December 8, the S&P 500 closed at 2,246.19, up 12% for the year, and higher than the forecast from the most bullish strategist, Fundstrat's Tom Lee.
Here's what some of the pros are saying about 2017:
Comment: "2017 may be the least certain in years, with higher-than-usual risks and a binary set of outcomes that have dramatically contrasting results: euphoria or fizzle, significantly higher or lower than the base case," said Savita Subramanian.
"As the likelihood of pro-growth policies waxes and wanes in the coming months, we see potential for big market swings. Risk/reward will be more important than absolute targets."
*2017 could be a binary year where the market falls to 1,600 in the bear case and rises to 2,700 in the bull case, Subramanian said.
Comment: "The key positive for 2017, in our judgment, is that investors are overweight deflation hedges (i.e. bonds) relative to inflation hedges (equities) at a time when policy makers are moving away from NIRP towards fiscal stimulus, and inflation expectations are set to continue rising," said Andrew Garthwaite.
"However, we see a down market in H2 2017, hence our year-end 2017 target of 2,300. The second half challenges include the potential negative impact of US bond yields above 3% (3% being the CS view for end-2017); the growing pricing power of US labor squeezing profit margins; and the risk of China refocusing on reform rather than pro-growth policies. We continue to prefer equities to both bonds and gold."
*2,350 mid-year
Comment: "Despite the potential for more volatility, we expect the Bull to celebrate its 8th birthday in March 2017," Julian Emanuel said.
"No recession is in sight, for now. However, the old saying 'Three Steps and a Stumble' could put stocks to the test when the Fed hikes again after a hike this December."
