Year-End 2011 S&P500 Price & Earnings Forecasts

Yesterday (September 19) The Wall Street Journal had an article titled “Wall Street’s Optimism Fades.”

The article contains a variety of forecasts and commentary regarding the stock market and earnings.

Here are two excerpts of forecasts:

Goldman Sachs last Wednesday ratcheted down its end-of-year prediction for the S&P 500 to 1250, from its previous forecast of 1400. Last Monday, Wells Fargo dropped its forecast to 1250 from 1390. And on Friday, Citigroup lowered its target to 1325 from 1400.

The S&P 500 ended last week at 1216.01, which leaves most of the predictions still looking relatively bullish. Strategists on average expect the S&P 500 to end the year at 1309, according to Birinyi Associates—a rise of 7.6% from Friday’s close through year end.

At the beginning of 2011, strategists were looking for an 8.5% gain for the entire year, predicting a year-end close of 1365.


Consensus earnings estimates for the S&P 500 companies this year fell below $100 a share last week, according to S&P Capital IQ, down from $100.31 on Aug. 24. For the past few years, analysts have mostly been right to stay optimistic; strong company earnings have been a big driver of the S&P 500’s 75% rise from March 2009.

To be sure, the consensus forecast for annual per-share earnings of $99.91 is still bullish, reflecting confidence that the economy can avoid a double-dip recession. In 2010, S&P 500 earnings were $84 a share, according to Barclays. But the falling forecasts indicate that even the most sanguine analysts are starting to worry about the burdens of a sagging economy and policy uncertainty.


I post various economic forecasts because I believe they should be carefully monitored.  However, as those familiar with this blog are aware, I do not agree with many of the consensus estimates and much of the commentary in these forecast surveys.


The Special Note summarizes my overall thoughts about our economic situation

SPX at 1219.79 as this post is written