MSNBC – After a surprising rally that propelled the stock market’s best-known indicator to record levels in 2006, analysts are looking for a less spectacular but still solid year in 2007.
Although the economy is slowing substantially and there are signs that inflation is heating up, the vast majority of forecasters are looking for a “soft landing” scenario that should lead to continued growth and a rising stock market, if not the double-digit returns of the past five months.
“I would use the expression single-digit,” said Hugh Johnson, chairman of Johnson Illington Advisors.
“I’m looking for single-digit growth in profits and a single-digit rise in the stock market,” he said. “We’re late in the cycle, and the economy is slowing and earnings should slow, which is verysymptomatic of the late stages of the cycle. The stock market should reflect that by going up at a much more sluggish rate.”
Sam Stovall, chief investment strategist for S&P Equity Research, agreed, saying the market is likely to grow solidly but well under the 14 percent return seen for the year to date. For next year, he is projecting the Standard & Poor’s 500, a broad measure of big-company stocks, will rise about 8 percent.
