NEW YORK (Reuters) - Margaret Patel, senior portfolio manager at Wells Capital Management, said on Thursday that the U.S. stock market should surprise to the upside next year and that the Federal Reserve will not raise rates until potentially 2016.
"Equities will do surprisingly well," Patel said at the Reuters Global Investment Outlook Summit in New York. Patel, who oversees about $1.4 billion at Wells Capital, said the benchmark S&P 500 stock index .SPX could notch gains in the mid-single-digit to high teens next year.
U.S. stock valuations were currently at average levels, she said, and growth in corporate earnings would exceed U.S. economic growth, which she sees expanding by a modest 2 percent next year.
“Realistically, global growth is decelerating everywhere and I don’t know if the U.S. can be too much counter-trend,” she said.
Patel’s 2015 forecast for the S&P 500, which has already hit multiple record highs and risen nearly 11 percent so far this year, is more optimistic than that of other strategists.
In a research outlook released Thursday, Goldman Sachs said it expects the index to end next year at 2,100 points, which would mark a 2.5 percent gain from Wednesday’s closing level of 2,048.72.
Patel said sluggish wage growth and downward pressure on commodities prices will keep U.S. inflation muted, which will in turn lead the Fed to delay its first rate hike until possibly 2016.
“I don’t expect the Fed to do much of anything” next year, she said.
Investors are watching the Fed closely for signs of when the U.S. central bank will hike short-term interest rates. The Fed has kept benchmark rates near zero since December 2008.
Minutes of the U.S. central bank’s October policy meeting, released on Wednesday, indicated a debate among policymakers over how much weight to give to signs that inflation expectations were slipping.
Patel also said she saw oil prices trading within a range of $60 to $80 a barrel for several quarters, largely on excess supply. U.S. crude CLc1 was last up 1.34 percent, at $75.68 per barrel.
Wells Capital Management had $338 billion in assets as of the end of September.
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Reporting by Sam Forgione; Editing by Leslie Adler