Oct. 27 (Bloomberg) -- The Standard & Poor’s 500 Index will extend gains through the end of the year even as economic concerns keep stock valuations low and earnings estimates become more realistic, Citigroup Inc.’s Tobias Levkovich said.
Improving U.S. economic data and better-than-forecast corporate earnings will support gains while continued “headline risk” and market exposure to macroeconomic conditions will prevent the rally from entering a bull market, said Levkovich, a New York-based U.S. equity strategist at Citigroup. He estimates the S&P 500 will end 2011 at 1,325, a 6.7 percent gain from yesterday’s closing price. That compares with the average 1,285 forecast of 12 strategists tracked by Bloomberg.
“We’re not off to the races into a new bull market, but we are going to trade to the upside,” Levkovich said in an interview on Bloomberg Radio’s “Bloomberg Surveillance” with Ken Prewitt and Tom Keene. “Valuations look pretty attractive, earnings expectations are starting to get more realistic and credit conditions have been fairly reasonable.”
The S&P 500 has risen 13 percent from Oct. 3 through yesterday, when the index came within 1 percent of a bear market as it almost extended its decline from its April peak to 20 percent. The gauge traded at 13.3 times earnings, below the average ratio of 16 during the past five years, Bloomberg data show. About three-quarters of companies in the measure that reported results since Oct. 11 have beaten analysts’ projections, according to Bloomberg data.
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