Credit Suisse cuts year-end target on S&P 500 by 7 pct

Credit Suisse slashed its 2011 year-end target for the S&P 500 index to 1,350 from 1,450, after it reduced its earnings expectations for the United States and euro-area citing weak macro-economic outlook. “We continue to believe in a sub-trend developed market recovery because of $6 trillion of excess leverage,” analyst Andrew Garthwaite said, even as he added that the current episode of economic weakness is a “mere mid-cycle slowdown.” [caption id=“attachment_55392” align=“alignleft” width=“380” caption=“Credit Suisse slashed its 2011 year-end target for the S&P 500 index to 1,350.  Christian Hartmann/Reuters”]  [/caption] He expects US gross domestic product growth to recover to about 2 percent from 1.1 percent in the first half of 2011, given that monetary policy is still very loose, housing cheap and US corporate balance sheets healthy. “None of the normal preconditions of a US recession are in place,” Garthwaite wrote in his global equity strategy note. He saw a 50 percent chance of more quantitative easing (QE) in the US, and said QE in the UK and Japan appear likely. Garthwaite, who maintained his overweight stance on equities, lowered his forecast for earnings growth in the United States to 12 percent from 14 percent in 2011, and in the euro-area to 7 percent from 12 percent. On Friday, world stock markets fell for the eighth straight session to the lowest since late 2010, with more losses feared if policymakers do not come to the rescue soon to stabilise the euro zone’s debt crisis and prevent the US economy from sliding back into recession. The benchmark MSCI all-country world stocks index fell 1 percent to the lowest since 1 Dec, 2010. The index has slumped nearly 11 percent since late July.