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July 03, 2014 at 08:13 AM
Wharton professor Jeremy Siegel predicts the Dow Jones Industrial Average could go up to 21,000 by year-end, he said on Wednesday during an interview on CNBC’s “Halftime Report.”
“I would not be surprised to see it over 18,000,” the renowned finance professor told CNBC. “I think the big difference between what I see now and what I saw last year is the interest-rate situation.”
Siegel credits low interest rates as the catalyst to send stocks soaring.
“The so-called new neutral, as PIMCO calls it, as Bill Gross calls it, really does, as he admits himself, argue for higher valuations in the market,” Siegel said. “We shouldn’t just think 15, 16 — the old historical [P/E ratio] normals — are normal anymore. Because if the interest rate is really going to be lower, and I do believe that, we are looking at 18 and 19. And at that level we could be well above 18,000 by the end of the year.”
The Dow broke 17,000 for the first time on Thursday, and Siegel’s expectations are that it will continue to climb.
