Wells Fargo fund pro sees 10% gain in 2016

December 11 00:54 2015

There is a lot of tension on Wall Street. The stock market has stalled near record highs. And the Federal Reserve is about to boost interest rates for the first time in nearly a decade. What better time to hear what some of Wall Street’s top strategists and money managers expect for 2016?  This is the fourth of five interviews in a week-long rollout  will publish a daily installment on next year’s investment outlook from top Wall Street pros leading up to the full Roundtable with all of the market pros’ advice and stock picks in our print edition. Coming Thursday: 2016 U.S. stock market outlook. Follow the conversation on Twitter at #Markets16.wells-fargo-hed-2013

Don’t buy into all the doom and gloom on Wall Street. U.S. stocks, bolstered by stronger profit growth driven by consumers that are in better financial shape amid a strong jobs recovery, could deliver a 10% gain in 2016. That’s the upbeat forecast delivered by Jeff Moser, portfolio manager for the Wells Fargo Large Cap Core Fund – one of five top Wall Street pros who shared their 2016 market outlook. While many market pundits are calling for another challenging year for U.S. stocks in 2016, Moser isn’t buying into all the negativity.

“I am a little more optimistic on 2016” than the naysayers, says Moser. “When we look to next year, there will be an opportunity for better earnings versus 2015. So we may get to double-digit (percentage) returns” in the stock market. Moser says corporate earnings drive stock prices. And he expects the U.S. profit picture to improve in 2016 after earnings growth was flat this year due to steep declines in the hard-hit energy sector and the negative impact of the rising value of the dollar on U.S. multinationals.

Better earnings growth in 2016, Moser argues, will be largely driven by the U.S. consumer, which is enjoying an upswing as jobs become more plentiful, wages tick up and the cost savings from lower prices at the gas pump add up. That bullish combination is boosting confidence of Main Street consumers, which account for roughly 70% of the nation’s economic activity. “As we go into 2016,” says Moser, “the consumer will start to feel a little better.” Another plank in Moser’s bullish thesis for 2016 is his belief that angst surrounding the Federal Reserve, and its plans to hike interest rates for the first time in nearly a decade, will ease next year.