Hawkish-Toned Fed Won't Stop Stocks From 'Grinding Higher'

U.S. stocks appear priced-to-perfection with a narrow margin of error, but low interest rates and an improving economy will push equities higher the rest of the year, said Eric Wiegand, senior portfolio manager U.S. Bank. "Our underlying premise has been and continues to be that an improving economy, both home and abroad, is required to drive earnings, which ultimately is required to support higher stock prices," said Wiegand. Wiegand's published end-2016 price target for the S&P 500, now at 2,143, is 2,225, or 19.0 times his EPS estimate of $117.00, within a low-high range of 1,900 to 2,300. He said valuations are high when compared to historical norms, yet short of extremes with the S&P 500 trading at roughly 18.5 and 20.5 times estimated 2016 and trailing 12-month estimates. Valuations can stay elevated for the foreseeable future in a low interest rate global environment, in his view.