Some Stock Bulls Tread Lightly Into 2014; Strategists Take Cautious Approach on How Far S&P 500 Can Climb
Stock-market strategists, typically a bullish bunch, are taking a cautious approach to 2014.</br></br>The S&P 500-stock index is heading into the final weeks of 2013 with a 27% gain despite a sluggish global economy, stalling corporate earnings growth and worries about a pullback by the Federal Reserve in its efforts to support the U.S. economy.</br></br>But even as many strategists expect an improved backdrop next year, and for interest rates to stay low, they are expecting the stock rally to cool significantly. Forecasts center on gains in the mid-to-high single-digit percentages for the S&P 500 in 2014.</br></br>In large part this caution reflects expectations that investor enthusiasm for stocks will be restrained in an environment in which structural challenges continue to hold back the U.S. economy. The result, many strategists said, is that stocks are unlikely to see a continued rise in valuations against earnings growth as they did in 2013.</br></br>In addition, bullishness is being muted by a belief that the Fed will in coming months start to pare back the easy-money policies that many said have played a key role in driving stock prices higher this year.