In a recent CNBC interview, Wharton finance professor Jeremy Siegel–who predicted the Dow’s rise to 24,000—said he thinks the index will hit 25,000 adding that the milestone will be spurred by tax reform. [Note: the DJIA closed yesterday at 24,504.]
“The corporate tax cut is particularly what I think the market wants,” Siegel said, adding, “That could boost earnings by 8 percent or so, and that’s a positive for stocks.” That said, he argued that valuations could reach a peak next year and, while he doesn’t envision a bear market, believes that headwinds from inflation and political uncertainty could create downward pressure and add volatility to the market in 2018.
Another variable, Siegel pointed out, is the Fed’s monetary policy, noting that decreasing unemployment might induce further tightening. That, he said, will “definitely put a pause” on the market.