What will the markets do next year? Will stocks head higher or lower? Where will the S&P 500 finish at the end of 2015?
But there is something to be gained out of the host of next-year projections you’ll see across financial media (including right here in just a few more paragraphs). Those projections and predictions offer the rest of us a mental road map of sorts.
Thing is, while even the best financial experts “get it wrong” from time to time, they do spend their lives with their noses in the markets. That means they typically at least have an idea of the pockets of the economy and stocks where investors should keep their eyes locked, and what pressures or tailwinds likely will push on the markets — and just knowing where to look is a big part of the battle.
So where should your attention be in 2015? Our experts talk about where they expect the markets to go in 2015, and what they expect will have the biggest effects.
Hilary Kramer, Editor, GameChangers
Wall Street hit some rocky patches in 2014, and I expect that same volatility to continue as we ring in 2015 given some of the froth that still remains in the market.
The catalysts for any pullbacks will come largely from macro concerns, including global issues out of Greece, China, Russia and Venezuela. The European Central Bank’s next move also will be closely watched and could influence U.S. trading.
Oil remains one of the biggest headlines right now and could be a driving force to a volatile start to 2015. While dropping oil prices puts money into consumer’s pockets, the impact on the job market is yet to be determined.
The good news is that despite these unknown factors, moderate earnings growth and low interest rates will serve as two main sources to counteract the larger macro risks. As a result, I see any market weakness eventually recovering on economic data points to ultimately add up to an annual return in the upper single digits.
The bottom line is: 2015 still will be a great time to be invested in the stock market. However, the key will be to invest in select opportunities that are positioned to weather any potential storms ahead.
My advice is to focus on catalyst-driven stocks that don’t rely on larger market momentum for growth and that boast a history of stable results.
Jeff Reeves, Editor, InvestorPlace.com
After another strong year for stocks, investors are feeling good as we enter 2015. And why shouldn’t they, considering the markets continue to set all-time highs like clockwork and the S&P 500 has tripled since its March 2009 lows?
Unfortunately, I have a bad feeling that the part is going to end in the new year. The Fed has shut off its bond-buying stimulus and is nearly certainly to raise interest rates in the next year. At the same time, the recovery in the housing market and labor market in the U.S. is old news and improvements will be harder to come by. And overseas, Europe is at serious risk of another recession amid deflationary pressures, and China’s growth rate could theoretically slump to the lowest level since before the dot-com crash.
Throw in political unrest and crashing commodity prices, and it’s enough to make me go “risk off” in a hurry.
I expect the S&P 500 to finish 2015 incrementally higher, just shy of 2,200 for about 3% to 5% gains. However, I expect big fireworks all year long, with triple-digit swings in the Dow and some sectors significantly lagging. The area of the market I expect to do best includes healthcare stocks, with built in “customers” via aging baby boomers, and the areas I am most pessimistic on are commodity stocks in both energy and materials, thanks to soft pricing and a strong dollar.
John Jagerson and Wade Hansen, Editors, Slingshot Trader
While many continue to wait for the S&P 500 to turn around and start moving lower, we anticipate the stock market is going to prove rather resilient in 2015.
For years now, the stock market has been reliant on the largess of central banks — most notably the Federal Reserve, the European Central Bank, the Bank of Japan and the People’s Bank of China. These central banks have pumped cheap money into the market, and stock traders have happily pushed prices higher.
That all started to change when the Fed announced it was going to taper and eventually eliminate its quantitative easing (QE) program. Traders were nervous that the market wouldn’t be able to survive without its most important “sugar daddy.”
However, while the Fed has been slowly reversing course on its easy monetary policy during 2014, the other major central banks have been doubling down on their efforts to stimulate their respective economies by lowering interest rates and expanding their own QE programs. This has helped ease the transition away from the Fed’s QE program.
Interestingly, we also are seeing decent economic growth in the United States. It’s true that the European and Chinese economies are slowing down, but those slowdowns are not going to be enough to curb growth in the United States in the near term.
This gives us confidence that the S&P 500 has reached escape velocity for now. While the gravitational pull of higher interest rates from the Fed and a slowing global economy may eventually start to drag stocks lower, the market is going to remain resilient in 2015.
Louis Navellier, Editor, Blue Chip Growth
I expect 2015 to be even than 2014 and wouldn’t be surprised if the S&P 500 rallied 20% to 25% next year. Here’s why:
The Fed will likely maintain its 0% interest rate policy for all of 2015. The Fed has its hands tied because if it raises key interest rate, it will artificially strengthen the U.S. dollar even more and encourage deflation. Low interest rates encourage money to flow into the stock market and for companies to buy their stock back.
And we are entering the third year of the presidential term, which tends to be a strong year for the market. This year, presidential hopefuls will start running around and making promises for how they plan to fix the country. This tends to boost sentiment on both Main Street and Wall Street.
I have my eye on the technology and healthcare sectors, especially biotech companies. ObamaCare has put healthcare spending at center stage, and any biotech company that develops a cheaper substitute for costly medical procedures will be very successful. Beyond that, I expect small- and mid-cap stocks to make a comeback. The stronger U.S. dollar is pinching the “profits” of big multinational companies, so smaller companies that aren’t paid in eroding currencies are looking more attractive than ever.
While we’ll likely see more corrections in 2015 due to increasing HFT activity, I’d view any near-term pullbacks as buying opportunities.
The bottom line is that 2015 is shaping up to be another double-digit year for the S&P 500.
Mike Turner, Editor, Signal Investor
With the new year just around the corner, it’s important to take some time to set goals for the coming year. Personally, I am a long-term investor, one-week-at-a-time. So, I am careful not to venture out too far into the future.
That said, I do have a few thoughts on 2015 …
First, there are a lot of scary unknowns lurking in the darkness that could derail the market. For example, China’s ill-defined and hard-to-believe GDP seems to be weakening. Europe and Japan are also on weak footing, and either or both could slip into a recession in 2015.
However, I think dropping oil prices will be far more of a benefit than a detriment to most economies and public companies. And if I’m right, then 2015 could be a banner year.
So, assuming none of the bad things happen this coming year, I see the market robustly growing 11% to maybe 16%.
And strategic investments could benefit accordingly.