2019 Estimates For S&P500 Earnings & Price Levels

In the December 17, 2018 edition of Barron’s, the cover story is titled “2019 Outlook:  More Sun, Fewer Clouds.”  The subtitle is “U.S. stocks could rally more than 10% in 2019 as the economy grows, earnings rise, and interest rates stay low.”

Included in the story, 10 investment strategists give various forecasts for 2019 including S&P500 profits, S&P500 year-end price targets, GDP growth, and 10-Year Treasury Note Yields.

An excerpt:

Yet as U.S. stocks stumble toward what could be their first yearly loss since 2015, next year is looking rather sunny. So say the 10 market strategists Barron’s consulted this month, all of whom have 2019 targets for the S&P 500 index that are higher than the benchmark’s recent price level of 2600. Based on the group’s mean prediction, the S&P 500 will end next year at 2975, indicating a gain of more than 14%.

The strategists, who mostly hail from investment banks and asset-management firms, offered up individual S&P targets ranging from 2750 to 3100. The stock market is down almost 3% this year, as measured by the S&P 500—a disappointing showing in any year, but especially so after last year’s nearly 20% gain.

To some degree, 2017’s rally discounted this year’s robust profit growth, likely to total over 20%. Could 2018’s downdraft signal next year’s earnings moderation? Our prognosticators expect S&P 500 profits to rise just 5% to 6% in 2019, to $172 per share,partly because companies will be losing the boost from this year’s reduction in federal taxes.

Industry analysts, who typically have loftier forecasts than “top-down” strategists, anticipate per share profit growth of 9% next year.

As seen in the article, the investment strategists expect an average 2019 GDP growth of 2.50%.


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 2599.95 as this post is written