Star stock guru Jeremy Siegel, a finance professor at University of Pennsylvania, is sticking to his year-end forecast of 18,000 for the Dow Jones Industrial Average and says it may reach 21,000.
The Dow stood at 16,969.02 Wednesday afternoon, not far from Tuesday's record of 16,998.70.
"I would not be surprised to see it over 18,000,"
Siegel told CNBC. "I think the big difference between what I see now and what I saw last year is the interest-rate situation."
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The 10-year Treasury note yielded 2.62 percent Wednesday afternoon, down from 3.04 percent Dec. 31. Low rates will continue to boost stocks, Siegel said.
"Could it [the Dow] go to 19,000, 20,000? It could," he said "I'm not going to say that's the likely event, but so many people have missed this bull market that they start saying, 'Hey, you know, this is my last chance.'"
Even 21,000 is a possibility in the short term, Siegel said. "Markets often go beyond fair market value before they correct back down."
And what could wipe out his forecast? "My biggest worry would be on the inflation front," Siegel said. Consumer prices rose 2.1 percent in the year through May.
"If we start seeing some supply constraints, if the low unemployment brings wage increases that are not matched by productivity increases, oil stays high and gets higher, that'll be a problem," he added. Moreover, much higher gasoline prices "would certainly be a problem."
Recent signs of economic strength in areas such as housing and jobs have made many investors bullish on stocks. "Everything that we're seeing in the second quarter has generally been improving," Chris Bouffard, chief investment officer at the Mutual Fund Store, told
Bloomberg.
"The market's looking to say the outlook for the next few quarters is more positive than we saw certainly in the first quarter."
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