Although the market still needs fiscal clarity, the S&P 500 will likely hit 1,600 in early 2013, Stifel Nicolaus Chief Macro and Portfolio Strategist Barry Bannister said Tuesday on CNBC.
On "Fast Money," Bannister shared reasons why stocks are headed higher:
- Market is in the late stage of a secular bull run
- "Fiscal cliff" is a red herring
- ECB forcing fiscal process
- China stabilizing short-term
"Right now the central banks have been in the lead around the world, and we need the politicians to fall in line," he said. "It's taking a little longer than I thought, though."
Bannister, who had originally set a year-end target of 1,600, revealed which sectors he believed would drive equities higher.
"Keep in mind that the largest earning shares of the S&P are in financials, energy, materials, industrials, and those sectors would get the P/E re-rating on growth confidence," he said. "One of the things the bears aren't pointing out is that since the S&P downgrade of U.S. debt, the S&P is up 200 points and earnings estimates for this year and '13 are down by $200.
"So you've had a P/E re-rating, and the value side of the market led by financials should be the strongest part."
Sectors to avoid, according to Bannister: Utilites, health care, consumer staples and telecom.
More From CNBC
The Most Dangerous Idea in Washington: Economist
Toll Brothers: Overvalued or Room for Growth?
These 2 Special Dividends Would Be Huge: Pro