The S&P 500 will end 2005 at 1,075, while the Nasdaq composite will close this year at an even 2,000, predicted Steve Leuthold, chairman of Leuthold Group, an investment research firm and an affiliate of Leuthold Weeden Capital Management, in a report to clients. The S&P 500 closed 2004 at 1,211.92 , and the Nasdaq composite closed at 2,175.44.
Mr. Weeden also forecast that the Federal Reserve will have raised the federal funds rate to the 3% to 3.25% range at year-end 2005, up from the current 2.25%. On longer-term interest rates, he predicted high-quality corporate bond rates will rise to 6.75% by year's end, up from the current 5.55%, while 20-year Treasury bond rates will move to 6.25% from the current 4.85%.
The consumer price index will have a 12-month change of 3.8% at year-end 2005, and the CPI is expected to close 2004 at 3.6%, according to his report.
Mr. Leuthold also said he believes the U.S. dollar will close 2005 at $1.16 to the euro, compared to $1.34 to the euro at year-end 2004.