Bank of America Forecasts S&P 500 at 1,350 in 2012 on Earnings

Bank of America Corp. (BAC)’s Savita Subramanian estimates the Standard & Poor’s 500 Index will rise to 1,350 in 2012, as the U.S. economy avoids a recession and earnings growth continues to push the gauge higher.

Combined profit by companies in the benchmark equity measure will be $98.25 a share this year and $104.50 next year, according to Subramanian, the head of equity and quantitative strategy, in her first equity forecasts since taking over the role from David Bianco in September. The year-end projection is 6.8 percent higher than the S&P 500’s close on Nov. 11.

“While we expect uncertainty and volatility to remain high well into 2012, the avoidance of a U.S. recession and continued earnings growth could drive the S&P 500 toward the high end of its two-year trading range” of 1,100 to 1,365, a team led by Subramanian wrote in a note dated today.

The S&P 500 is up 0.5 percent for the year as improving economic data and 11 straight quarters of corporate earnings topping analysts’ estimates have offset concern European officials will fail to contain the region’s sovereign debt crisis. The U.S. benchmark equity index has rebounded 15 percent since Oct. 3 after it fell within 1 percent of a bear market from its April high. Analysts that cover stocks in the S&P 500 predict profits will be $99.13 a share this year and $109.30 in 2012.

New York-based Subramanian recommends investors hold a greater proportion of consumer staples and technology stocks than are in the index and a smaller stake in materials and financial companies.

To contact the reporter on this story: Inyoung Hwang in New York at ihwang7@bloomberg.net.

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

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