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S&P 500 Year-End Price Targets

At the start of 2011, the average consensus year-end S&P 500 price target among major Wall Street strategists was 1,374.  This would have resulted in a 2011 market gain of roughly 10%.  On May 24th, the consensus year-end target hit its high for the year at 1,406 (the poll of strategists is conducted weekly by Bloomberg).  At the time, the S&P 500 itself was up slightly more than 5%, and a further move up to 1,406 would have resulted in a full-year gain of 11.8%.  The average price target remained relatively flat around the 1,400 mark from May through the end of July, but once August rolled around and the markets began to sink, strategists began to lower their year-end targets.  At the moment, the average year-end target sits at 1,311, which is a drop of 63 points from the start of the year.  The current targets for each of the firms that are surveyed are shown in the first chart below.  While many strategists have lowered their year-end price targets versus where they started the year, there is still just one (Credit Suisse) that is looking for the market to decline from current levels from now to year end.  JP Morgan has the highest year-end target at 1,475, which would be a gain of 23% from current levels.

As shown below, strategists have been lagging rather than leading the market with their price targets so far this year (this is nothing new).  The blue line in the chart below shows the average year-end target, while the red line shows the S&P's actual performance.  As shown, the average price target didn't start dropping until well after the market peaked for the year, and it has recently been dropping at a fast rate, even as the market has bounced off of its lows.

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