Week Ahead: Stocks Look Ready to Push Past 2009 Highs

By: Patti Domm Executive Editor

Stocks should trend higher in the coming week and are in easy striking distance of a new high for the year.The quadruple options expiration on Friday could add a flurry of volatility, but investors should take encouragement from a recent batch of better economic data that has some economists ratcheting up forecasts for fourth quarter growth. JPMorgan, for one, raised expectations for fourth quarter GDP growth to 4.5 percent from 3.5 percent after upside surprises in inventories, net exports and retail sales.In the coming week, the Fed holds its final meeting of the year, and inflation data, industrial production, jobless claims and housing reports will dominate the economic news. Traders say stocks could meet little resistance in their upward climb, barring no new nasty surprises, like the Dubai World debt restructuring. They also expect the coming week will see even fewer players participating in the markets ahead of year end.

http://www.cnbc.com/id/34386608

JPMorgan Says S&P 500 Will Rise 18% by End of 2010

(Bloomberg) -- The Standard & Poor’s 500 Index will rally 18 percent to 1,300 next year as the economy recovers and Federal Reserve Chairman Ben S. Bernanke holds down interest rates, said Thomas J. Lee, the chief U.S. equity strategist at JPMorgan Chase & Co. The forecast level represents a multiple of 14.4 times the $90 a share the bank estimates the companies in the index will earn in 2011, equity strategists led by Lee in New York said in a report dated yesterday. The S&P 500 trades for 22.2 times its combined profit in the last 12 months, the most expensive level since 2002, data compiled by Bloomberg show.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aAPPUhu11D6s

Strategists Get U.S. Stocks Right, See More Gains: Chart of Day

(Bloomberg) -- Wall Street strategists, who redeemed themselves as equity prognosticators this year, are unanimous in expecting U.S. stocks to rise more next year after a nine-month rally. The CHART OF THE DAY compares the average estimate for the Standard & Poor’s 500 Index, as compiled from Bloomberg surveys, at the beginning of every year since 2005 with the benchmark’s year-end value.Yesterday’s S&P 500 close was 2.2 percent higher than the 1,078 average estimate at the start of this year. In 2008, when the index suffered its biggest full-year loss in seven decades, it trailed the comparable projection by 45 percent.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aS12b5dCPH3w

Options Show S&P 500 Rally in Peril Amid Bearish Bets

(Bloomberg) -- Traders are boosting bets in the U.S. options market that this year’s rally in the Standard & Poor’s 500 Index won’t last. The fourth most-active options to sell the SPDR Trust Series 1 yesterday were December 2010 $55 puts, contracts with so-called strike prices more than 50 percent below the cost of the exchange-traded fund known as the SPY. S&P 500 options to protect against losses in 2010 are 33 percent more expensive than one-month contracts, among the highest premiums in the past five years, according to data compiled by Bloomberg.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=akKQKa.Hbk5M

Rate Worry Could Mean US Equity Pullback: Analyst

By: Reuters
US stocks could fall sharply in early 2010 as investors fret about changes in US monetary policy, though the economy's recovery looks sustainable, Larry Kantor, Barclays Capital's head of research said Thursday. "It could be something in the order of between 5 and 10 percent. This is not the start of the bear market," he told Reuters on the sidelines of a briefing to unveil his firm's 2010 global outlook. Expectations that the Federal Reserve could raise interest rates have moved into sharper focus following the better-than-expected November non-farm payrolls report.

http://www.cnbc.com/id/34367117