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Bianco Withdraws 5% S&P 500 Rally Estimate Before Greek Election
David Bianco, Deutsche Bank AG’s chief U.S. equity strategist, withdrew a forecast that the Standard & Poor’s 500 Index will post a near-term gain of 5 percent or more, citing uncertainty before Greece’s elections this weekend.
While Bianco maintained his year-end projection of 1,475 for the index, he said he’s no longer convinced the next 5 percent move in the gauge is higher. The strategist cited the difficulty predicting the Greek elections, which may result in the nation leaving the euro, and disappointing reports on the U.S. and global economies.
“We will reengage our ‘Next 5%+’ call as either up or down after the Greek elections and when incoming data on the global economy and cross asset class signals help to tip our scales,” Bianco wrote in a note dated yesterday. The “Greek elections are too close to call; even if Syriza beats New Democracy we do not expect an immediate euro withdrawal or aggressive EU confrontation.”
Policy makers have intensified warnings that Europe’s failure to tame its debt crisis threatens to roil world financial markets as Greece’s looming election presents the next flashpoint for investors. A victory by Syriza, which opposes spending cuts that are the condition of more aid, could prompt the nation’s exit from the euro. The Group of 20 leaders will meet in Mexico next week amid the weakest international economy since the 2009 recession.
The S&P 500 gained 0.7 percent to 1,337.88 at 11:34 a.m. New York time today amid speculation central banks will take action to spur economic growth. Greek voters go to the polls in two days after a May 6 election failed to produce a government.
Bianco said the index is likely to rebound should it fall below 1,325, and fall if it exceeds 1,375.
Concern about a global economic slowdown and a worsening of Europe’s debt crisis put the S&P 500 on the brink of a correction, or 10 percent drop, earlier this month. The index dropped 9.9 percent from an almost four-year high in April through June 1.
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