Dow 20,000, here we come, according to Wharton professor Jeremy Siegel

March 30, 2015 at 11:41 AM
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Stock market sage Jeremy Siegel says the Dow is headed toward 20,000 as early as year-end.

The professor of finance at the Wharton School and author of "Stocks for the Long Run" told CNBC on Friday that he still believes "20,000 is the fair market value of the Dow given interest rates and even prospective interest rates, but it's not going to be there in the next month or two, maybe by the end of the year."

Siegel has been predicting 20,000 on the Dow since July, but in early March he became more tentative about his forecast because of a possible Federal Reserve rate hike by midyear.

Now Siegel says, "The Fed mostly gets it" while before he "thought they were being way too aggressive in projections of interest rates."

After the last Fed meeting in mid-March, Fed Chair Janet Yellen said the central bank's decision to raise rates will depend on more improvement in the labor market and higher inflation, closer to the Fed's 2% target. The stock market rallied, on the expectation that the Fed wouldn't necessarily hike in June. The Fed hasn't raised rates in nine years.

Siegel told CNBC that continued low rates are supporting stocks and he expects the Dow will now be trading in a range between 17,000 and 18,500. He also said a more stable or even weaker dollar would help lift stocks since the recent 20% rise in the greenback is "tantamount to a Fed tightening of maybe 50 basis points."

Siegel has called the market correctly before. In April 2013, when the Dow was trading around 14,600, he said it would end the year between 16,000 and 17,000. It closed at 16,577.

In January 2014, he predicted the Dow would finish the year near 18,000. It finished at 17,823.

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