Throughout December, Wall Street’s top strategists published their 2013 targets for the S&P 500.However, almost all of them said that their targets would likely change depending on the outcome of the fiscal cliff dealings.
Well, now we have a deal, and Wall Street is cranking up its forecasts.
Deutsche Bank’s David Bianco just raised his year-end target from 1,500 to 1,575. From his note to clients this morning:
Fiscal cliff deal done: 12-month S&P target raised to 1575 from 1500
Congress passed legislation to avert the fiscal cliff on New Year’s Day. Although the deal only covers taxes and pushed the spending issues off for a couple of months, we are pleased that it kept the top dividend and capital gains tax rates low and equal at 23.8%. The dividend tax rate was our chief focus and it staying equal to the capital gains rate puts 1600 within 12-month reach, in our view. But because spending cuts must still be addressed per sequestration and the debt ceiling and also because the tax hikes are right at our ~1.25% tolerance level for confidence in 1H growth, we raise our 12-month S&P 500 target from 1500 to 1575.
Bianco’s new target implies a 9 per cent gain from where the S&P 500 is trading today.