One of the biggest bears on Wall Street has toned down his snarl.
Richard Bernstein, chief U.S. strategist for Merrill Lynch & Co., told clients Tuesday that he had raised his 12-month forecast on the blue-chip Standard & Poor's 500 index to 1,010 from 890.
If he's right, the S&P still would decline about 10% this year from Tuesday's close of 1,123.67. But his previous forecast called for a 21% drop.
Bernstein said he was raising his target because of an improvement in the valuation, technical and sentiment models he uses to predict market returns.
Nonetheless, his forecast remains the lowest among 14 brokerage strategists surveyed weekly by Bloomberg News. His recommended asset allocation -- 45% stocks, 45% bonds and 10% cash -- also has the lowest stock portion among the strategists.
Bernstein, who took over as Merrill's U.S. strategist late in 2001, has consistently argued that the market was overvalued. A year ago he predicted that the S&P would end 2003 at 860.