Wall Street Turns Bearish on Stocks After Bad Year

One bad year in the stock market has turned Wall Street strategists into bears after two decades of bullishness.

The average forecast of handicappers tracked by Bloomberg calls for a decline in the S&P 500 next year, the first time the aggregate prediction has been negative since at least 1999. Most of them turned progressively more dour as the worst year in the market since the financial crisis moved toward its end.

Strategists often say they have no crystal ball, and the breadth of outcomes seen by 17 firms makes the point. The S&P 500 is forecast to do everything from rise 10% by next December to fall by 17%, the widest gap since 2009, reflecting a debate over the path of Federal Reserve policy and whether the economy is bound for a recession.

“There’s a divide economically, and that is what’s causing a divide among the market forecasters for the S&P 500,” said Rich Weiss, chief investment officer of multi-asset strategies at American Century Investments. “For the stock market to be down two years in a row, that doesn’t happen very often. That would assume that this recession is really going to be bad and the market continues downward or flat for a longer time.”

In almost a century of historic data, two straight years of losses or more only occurred on four separate occasions, with the latest episode coming during the bursting of the dot-com bubble.