By Caroline Valetkevitch
NEW YORK, Sept 21 (Reuters) - U.S. stocks are a more attractive investment option than Treasuries, partly because of the outlook for economic growth and improved liquidity, Barclays Capital analysts said.
They see the Standard & Poor's 500 Index ending the year at around 930 -- below its close on Monday at around 1,064.66.
Of the three asset classes of equities, credit and Treasuries, 'only the equity market offers significant leverage to the improving growth outlook,' the Barclays analysts wrote.
'In order for Treasury fundamentals to improve, we would need the economic recovery to stall and the (Federal Reserve) to expand and extend its asset-purchase program,' they said.
They recommended cyclical stocks, or those that tend to follow the economy's cycles, and technology, industrials and energy sectors in particular.
An improvement in liquidity conditions also helps stocks, they said, noting: 'We think ample liquidity conditions are likely to persist over the course of the year, as traditional monetary policy and (quantitative easing) lead to broader improvement in capital market liquidity.'
Central banks have been instrumental in increasing liquidity since the start of the recent credit crisis.
The chance of a correction in equities is still there, although 2009 could prove to be like 2003. Stock prices 'rallied through the end of '03 with little more than a hiccup,' they wrote.
The S&P 500 has risen about 57 percent since hitting a 12-year closing low in early March, and is up about 18 percent since the start of the year.
Late Monday, the benchmark 10-year Treasury note slipped 4/32 in price, with its yield at 3.48 percent, up from 3.46 percent on Friday.
(Editing by Jan Paschal) Keywords: MARKETS STOCKS/BARCLAYS (caroline.valetkevitch@thomsonreuters.com; +1 646 223 6393; Reuters Messaging:caroline.valetkevitch.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
NEW YORK, Sept 21 (Reuters) - U.S. stocks are a more attractive investment option than Treasuries, partly because of the outlook for economic growth and improved liquidity, Barclays Capital analysts said.
They see the Standard & Poor's 500 Index ending the year at around 930 -- below its close on Monday at around 1,064.66.
Of the three asset classes of equities, credit and Treasuries, 'only the equity market offers significant leverage to the improving growth outlook,' the Barclays analysts wrote.
'In order for Treasury fundamentals to improve, we would need the economic recovery to stall and the (Federal Reserve) to expand and extend its asset-purchase program,' they said.
They recommended cyclical stocks, or those that tend to follow the economy's cycles, and technology, industrials and energy sectors in particular.
An improvement in liquidity conditions also helps stocks, they said, noting: 'We think ample liquidity conditions are likely to persist over the course of the year, as traditional monetary policy and (quantitative easing) lead to broader improvement in capital market liquidity.'
Central banks have been instrumental in increasing liquidity since the start of the recent credit crisis.
The chance of a correction in equities is still there, although 2009 could prove to be like 2003. Stock prices 'rallied through the end of '03 with little more than a hiccup,' they wrote.
The S&P 500 has risen about 57 percent since hitting a 12-year closing low in early March, and is up about 18 percent since the start of the year.
Late Monday, the benchmark 10-year Treasury note slipped 4/32 in price, with its yield at 3.48 percent, up from 3.46 percent on Friday.
(Editing by Jan Paschal) Keywords: MARKETS STOCKS/BARCLAYS (caroline.valetkevitch@thomsonreuters.com; +1 646 223 6393; Reuters Messaging:caroline.valetkevitch.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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