By Rita Nazareth
Sept. 28 (Bloomberg) — The Standard & Poor’s 500 Index is poised for its biggest fourth-quarter rally in a decade as the economy recovers and earnings exceed analysts’ forecasts, according to Byron Wien, vice chairman of Blackstone Group LP.
The benchmark gauge for U.S. stocks will rise to 1,200 by the end of the year, a 13 percent advance from today’s close of 1,062.96, Wien said in a telephone interview. The forecast is a reiteration of Wien’s prediction at the start of 2009 that the S&P 500 would climb 33 percent this year.
“I’m not backing away from it,” said Wien, 76, the former chief market strategist for hedge fund Pequot Capital Management. “In March, that didn’t look too good and people wouldn’t make eye contact with me. But now, with three months to go, that looks like it may be realized. The economy will be stronger and corporate earnings both in the third and fourth quarters will be better than expected.”
The S&P 500 has rebounded 57 percent from a 12-year low on March 9 amid signs the recession is easing as companies from Johnson & Johnson to Goldman Sachs Group Inc. posted earnings that beat analysts’ estimates.
Combined earnings for S&P 500 companies will exceed $60 a share this year and $75 a share in 2010, Wien said. He’s more bullish than average of strategists surveyed by Bloomberg, which forecast S&P 500 earnings of $56.33 a share in 2009 and $69.44 next year.
Wien was hired by Blackstone, the world’s biggest private equity firm, last month to advise the company and its clients on the economy and politics. Before Pequot, he was senior market strategist at Morgan Stanley. Pequot said in May it would shut down because of a federal insider-trading investigation.
At the start of 2008, Wien’s predictions included a 10 percent decline for the S&P 500 and onset of the first U.S. recession since 2001. The main benchmark for American equities sank 38 percent, the most since 1937, as financial shares collapsed and energy and metal producers tumbled.
To contact the reporter on this story: Rita Nazareth in New York at firstname.lastname@example.org
Last Updated: September 28, 2009 16:19 EDT