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2012 Stock Market Forecast

The markets were battered in 2011 by recession worries, Europe’s debt crisis, upheaval in the Middle East and a devastating Japanese earthquake and tsunami.

Despite all that, the Standard & Poor’s 500 index, the broadest measure of stock market performance, closed relatively flat on the year.

Douglas Blake, Senior Wealth Manager at Newbridge Securities Corporation:

“It’s been a whole lot of nothing in 2011, so I guess we can be encouraged that despite all of the problems, we’re kind of right back where we started. But we probably have to be disheartened by the fact that another year in the books shows little or no progress.”

Blake says the winners for 2011 – utilities, healthcare and consumer staples – are good bets for next year if investors want to continue to play it safe.

The losers for 2011: financials, materials and industrials.

For the year, the Dow gained 5.5%, the S&P was flat and the Nasdaq lost 1.8%.

Forecasts for the major U.S. indexes call for a stronger year in 2012… if they can clear some major hurdles.

PNC Asset Management Group’s Jim Dunigan:

“As Europe hopefully brings some resolution to its ongoing sovereign debt crisis, it should either help support equity prices, or hopefully propel them somewhat higher. Our forecast for 2012 is in the 1,350 range for the Standard and Poor’s 500.”

That would be a gain of about 7%. A Reuters poll of over 40 stock strategists expect the index to close just below that at 1,340.

Dunigan favors dividend paying stocks for next year, along with consumer discretionary stocks as the economy picks up.

Still, the slow U.S. economy and Europe’s debt crisis make the crystal ball forecasts for 2012 a little cloudy.