Dec. 31 - Wall Street showed its resilience in 2013, overcoming a series of challenges to post its best annual stock market gain since 1997, however, analysts predict much slower but steady growth in 2014. Conway G. Gittens reports.
PLEASE NOTE: THIS EDIT CONTAINS CONVERTED 4:3 MATERIAL What's able to leap over tall regulatory hurdles? Run faster than a do-nothing Congress and a government shutdown? And dodge bullets from economic shotguns overseas? It's Super Market. Despite obstacle after obstacle - Wall Street powered ahead with the Dow surging 26 percent in 2013, the Nasdaq jumping 38 percent and the S&P 500 rallying 29 percent - its best year since 1997. The market's not-so-secret power: the Federal Reserve, begins winding down its stimulus program, but the catalyst for the next leg up is already in place, says Brian Belski of BMO Capital Markets. SOUNDBITE: BRIAN BELSKI, CHIEF INVESTMENT STRATEGIST, BMO CAPITAL MARKETS (ENGLISH) SAYING: "We think that will be driven by capital expenditures returning, financial service strength in terms of earnings growth, and we do believe in the manufacturing renaissance will drive a lot of that as you start to hear terms like on-shoring in the next few years as jobs come back to America. We think that would drive growth from here. So we believe 2014 will be more of a transition year as we become less reliant on quantitative easing and the Fed and more reliant on fundamentals - especially the second half of the year." Transitions can be rocky, though. Belski expects the S&P 500 to top 2,000 in the first three months of the new year, but then settle down to 1900 by year's end. That's pretty close to the consensus year-end target of 1925, which would make for a year-on-year gain in just the single digits. But even that could be in jeopardy if the bond market does what the Fed has pledged not to: raise rates, warns Fred Dickson of Davidson Companies. SOUNDBITE: FRED DICKSON, CHIEF INVESTMENT STRATEGIST, DAVIDSON COMPANIES (ENGLISH) SAYING: "I think the big risk factor next year is if the bond market senses the economy is starting to move too quickly and that bond investors all of a sudden begin to fear the possibility of inflation, not in 2014 but in 2015, that moves up and I would say there will probably be some movement of funds and profit-taking out of stocks and movement back into bonds." Market watchers, however, say the probability of the economy shifting to rapid growth from tepid growth is low, which should keep stocks flying next year, just not as high as the past two years.