Stock-market guru Jeremy Siegel, professor of finance at the University of Pennsylvania, predicts there is a "real possibility" that the Dow Jones industrial average could hit 20,000 next year.
The Wharton finance professor and economist
told CNBC that an interest rate hike by the Federal Reserve would give the market clarity.
The central bank has not waited too long to raise rates, he added, but stressed it's now time.
"If we waited too long, we would see the long [bond] rate raising a lot more, saying ... you're going to have a lot of inflation in the future. It's been very well behaved."
The
Dow Jones industrial average was down 24 points, or 0.2 percent, to 17,705 as of 10:07 a.m. Eastern time Tuesday.
“Markets cannot escape the gravitational pull of the Fed, so the stocks are under pressure because of the fact that we may see interest rates rise in December,” Kim Forrest, senior analyst and portfolio manager at Fort Pitt Capital Group,
told MarketWatch.
The market ran up pretty hard the past six weeks, giving the U.S. equity market the most technical strength it has seen since at least the August selloff, Instinet Executive Director Frank Cappelleri told
The Wall Street Journal.
But if the market rolls over with this much buying momentum behind it, there isn’t much to arrest the slide. “The run is certainly getting to a point where the biggest gains may be behind us – at least for the short-term,” he said.
And not everyone thinks a rate hike will fuel higher market gains.
Charles Biderman, CEO of TrimTabs Asset Management, bluntly says a hike will push the nation into recession.
“And if the Fed does raise, it will kick the stock market into low gear or take it down a lot, and it will also slow the economy and put it into recession, next year being an election year,"
he predicted to CNBC.
"We'll start next year with lower stock prices and a slower economy,” he said.
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