Stock Market Trades Sideways, Analysts Believe Strong Chance of Rally in 2019

The stock market is currently experiencing a sideways trading session, with all of the major benchmarks trading down slightly. Although the markets have seen unprecedented volatility towards the end of 2018, analysts still have lofty expectations for how some major stocks will perform in 2019.

Their bullish views on the future of the markets is mostly validated by recent comments from Jeremy Siegel, professor of finance at the University of Pennsylvania’s Wharton School of Business, who also called the Dow hitting $20,000.

Stock Market Trades Flat, Analyst Says There Could be a Major Rally if US Avoids a Recession

The market has kicked off its first trading session of 2019 with a sideways trading session.

At the time of writing, the Dow Jones is trading down marginally at its current price of $23,296. The S&P 500 is also trading down slightly at its current price of $2,505. The Nasdaq is trading up 0.2% currently at $6,648.

Throughout the last quarter of 2018, the equities market has seen growing volatility resulting from growing trade tensions between the US and China, Brexit concerns, and rising interest rates from the Fed. The volatility, which led the benchmarks to end 2018 down, sparked concerns from investors and analysts alike regarding the possibility of a recession.

Jeremy Siegel spoke about the current market conditions, saying that although the markets are positioning themselves for a recession, if one is avoided the markets will have a great rally. He also noted that the next three months will likely be rough for equities investors.

“My feeling is that the market is virtually positioned for a mild recession, but I just don’t think that it’s going to happen. If we avoid a recession, we’re going to have a really good market… I think we swung too positive last summer and now I think we’ve swung too negative,” he told CNBC in a recent interview.

Clearly, analysts are not too fazed by the recent market volatility as they still hold lofty end-of-year price targets for some major stocks.

Visa Inc., UnitedHealthcare Group Inc., and Microsoft Corp. are analyst’s top three picks in the Dow according to their share of buy ratings.

Visa currently leads the way with 93% of analysts giving it a “buy” rating. It currently has a consensus price target at $163.89, marking an implied 12-month upside potential of 24% from its December 31st closing price of $131.94.

Currently, UnitedHealthcare Group has 92% of analysts giving it a “buy” rating, making it the second highest rated stock by analysts in the Dow. Its current consensus price target is set at $305.83, with an implied 12-month upside potential of 23% from its December 31st closing price of $249.12.

Microsoft is third on analyst’s top picks in the Dow, holding 89% of analyst’s “buy” ratings. Analysts have a consensus price target of $125.82, which implies a 24% 12-month upside potential from its December 31st closing price of $101.57.

Although the recent volatility in the equity markets may spill into 2019, analysts seem to concur that investors will see profitability in 2019.