Bear-stricken Wall St bets '09 will be a bull year
Wed Dec 31, 2008 4:59pm EST
By Leah Schnurr and Rodrigo Campos - Analysis
NEW YORK (Reuters) - Wall Street is betting a new U.S. president and a fresh stimulus package will prod stocks higher in 2009, following a year most investors would gladly forget.
路透社纽约消息——华尔街预期美国总统换届，系列刺激政策将促使美国股市上扬。尽管上年大多数投资者辍手。(我对股市经济不通，用词难免粗笨，敬请批评指正)
Investors are expecting gains of as much as 10 to 20 percent next year, partly reversing a dismal 39 percent drop in the S&P 500 in 2008 as trillions of dollars that have been sitting on the sidelines are plowed back into the markets.
预期新年有10%到20%的增益，
Signals from President-elect Barack Obama that he and his team will be ready to hit the ground running have boosted confidence that the government will do whatever it takes to tackle the year-long recession, prompting hopes of a so-called "Obama rally" in stocks.
While no one is expecting a V-shape rally straight to the top after markets were pummeled this year by frozen credit markets and a shrinking economy, analysts are optimistic markets will make sustainable gains.
"You've got expectations for earnings very, very low; you've got low valuations in stocks; and you've got a catalyst for political change," said Chris Orndorff, managing principal and head of equity strategy at Payden & Rygel in Los Angeles.
"We will see the bottom in the first quarter and I think the rally will continue on throughout 2009. I think 2009 could be a very strong year for stocks," said Orndorff, who expects the S&P 500 to recover 20 percent next year.
Analysts currently expect a 1.2 percent fall in fourth quarter earnings followed by a 9.5 percent drop for first quarter results, according to Thomson Reuters data.
Amid the low expectations, Obama has said signing a major economic stimulus package will be his priority when he takes over the presidency on January 20. The package aims to generate 3 million new jobs and could cost $775 billion or more.
Obama has touted infrastructure building as a target area for government spending, prompting some analysts to point to related shares, such as Caterpillar (CAT.N), as being possible leaders in 2009. Shares of the heavy equipment maker fell 38 percent in 2008.
Other sectors that could prop up the market include classic defensive sectors such as health care, and technology companies, which have large amounts of cash, making them more likely to weather weak consumer demand.
Investors said stabilization in the housing market -- the epicenter of the storm -- is key to reigniting the economy. Home sales have tumbled nearly 20 percent in the last year, while consumers that are no longer able to tap the equity in their homes struggle to pay off mortgages, driving foreclosure rates higher.
NEW YEAR, NEW PRESIDENT
Obama's spending program will reinforce a series of aggressive moves from the Federal Reserve in an attempt to stop the economy from deteriorating further.
"I do think stocks will rebound once all of the fiscal and monetary stimulus gain traction," said Jack Ablin, chief investment officer, Harris Private Bank in Chicago. Ablin said he expects a gain of 15 percent for the S&P 500 next year.
Markets racked up their worst performance in more than 70 years in 2008. The broad S&P 500 closed 2008 down 38.5 percent, in its third worst year ever.
With no safe place to put their money, investors opted to sit on their cash instead. Analysts estimate there are "trillions" of dollars sitting on the sidelines.
The historic sell-off has left shares trading at low valuations. The S&P 500 is currently trading at 12.5 times expected earnings going forward, about 14 percent below levels a year ago. The combination of bargain-basement prices and a cache of money without a home makes the odds for a rally next year favorable, analysts said.
Despite the hopes for 2009, market watchers caution they remain just that -- hopes.
The economy is expected to worsen, corporate results will likely be dismal and job losses are anticipated to climb, causing consumers to further curtail spending.
Stocks have attempted to rally in the face of negative news, bouncing 18 percent off 2008's closing low hit on November 20. Some pundits have speculated whether a bottom has been made, though others expect markets to fall through November's floor to new lows.
"What makes good bottoms is when the last bull has been carried out -- when you run out of sellers and there's nothing else but potential buyers," said Gary Shilling, president of A. Gary Shilling & Co. investment research firm in Springfield, New Jersey.
"I think you've still got a lot of people who are vulnerable to be shaken out."
But regardless of any rally, it will take years to recoup the money that was eviscerated in 2008.
"It will take four years to make back what you've lost this year," said Orndorff. "2009 will be the best of the next four."
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