The S&P 500 has gone from flat for the year to down almost 8% in barely a week. Eric Wiegand, Senior Portfolio Manager at U.S. Bank, said the drop from 2060 to 1900 will be more than reversed by the time 2015 is over. ‘Our yearend target for the S&P 500 is 2100 which puts us at about 18 times our below-consensus estimate of $117 as far as operating earnings,’ said Wiegand. ‘It’s likely to be a volatile ride, but we still have confidence that the economic data continues to be reasonably favorable at this point in time and valuations certainly have become more compelling over the course of the past week.’ Wiegand said the sharp drop in the Chinese stock market that triggered the selloff in U.S. stocks was more a sensitivity to potential problems in the Chinese economy than to Chinese equities. He said very few U.S. or even Chinese investors have direct exposure to Shanghai shares. ‘The United States is in a little bit more insular position,’ said Wiegand. ‘Only approximately 13% of GDP is attributable to trade so we are not nearly as sensitive to that. It just so happened that there was a confluence of events that transpired. China served as the tipping point in setting off the volatility.’
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