NEW YORK, Jan. 27 /PRNewswire-FirstCall/ -- Stronger performance in health care, information technology and communications stocks will likely push the S&P 500 higher, possibly above a fair value of 1300 in 2006, according to a recent CIBC World Markets report. "Continued economic growth in Asia and rebounding economies in Japan and Europe, combined with contained inflation and moderate central bank policies all point to a healthy market - even with moderation in the U.S. economy," says Subodh Kumar, Managing Director, CIBC World Markets. "The markets are in mid-cycle. A focus on efficiency and quality growth in a number of industries means an earnings peak will likely not happen before mid-2007, but above average growth in the technology, telecom and healthcare sectors will lead to higher gains in 2006," adds Kumar. The CIBC World Markets report notes that over the last three years since the S&P hit its cycle low (777 in October 2002 versus a March 2000 peak of 1527), cyclical leverage, high beta and even defensive postures have all had their day in the market. From 2002 to 2004, strong earnings momentum favored cyclicals and low quality. In an overall defensive 2005, utilities and energy dominated. CIBC World Markets now sees the market solidly in mid-cycle and expects this to continue through 2007. For 2006, it expects the market to see changed leadership, below consensus earnings, and expanding bifurcation (with an earnings peak as still at least 20 months away in mid-2007), which will see quality delivery as being potentially even more important than style, market cap, or sector tilts. In terms of value versus growth, the report finds that after five years of one-way value markets, a shift to quality growth recovery will occur, even as both styles oscillate over the longer term. A quality-of-earnings delivery- oriented market is also likely to focus on individual company revenue and market share gain, not on early-cycle aspects like accelerating economic growth or sharply rising industry revenues. This will be delivered by a number of industries outperforming prior leaders like utilities and energy. "We also believe media, entertainment, and stronger-execution consumer discretionary will contribute to gains," adds Kumar. "While it was a key growth driver in 2005, we underweight energy, not for quality reasons, but because of expected diminished price euphoria. While strong restructuring performers, we also underweight utilities as yield curves are as yet to stabilize and defensive aspects like earnings peaks are still distant." CIBC World Markets is the wholesale banking arm of CIBC, providing a range of integrated credit and capital markets products, investment banking, and merchant banking to clients in key financial markets in North America and around the world. We deliver innovative full capital solutions to growth- oriented companies and are active in all capital markets. We offer advisory expertise across a wide range of industries and provide top-ranked research for our corporate, government and institutional investor clients. DATASOURCE: CIBC World Markets CONTACT: Subodh Kumar, Managing Director, CIBC World Markets, (212) 667-5091, ; or Susan McDougall, Communications and Public Affairs, CIBC at (416) 980-4047

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