The U.S. economy is looking better this week, but Wall Street’s views about the state of the economy are conflicting

Editor’s note: Several stories this week that touched on the state of the economy have been confusing for investors — for different reasons. Although the Dow Jones Industrial Average closed up for the eighth…

The U.S. economy is looking better this week, but Wall Street’s views about the state of the economy are conflicting

Editor’s note: Several stories this week that touched on the state of the economy have been confusing for investors — for different reasons.

Although the Dow Jones Industrial Average closed up for the eighth straight day on Thursday — and the S&P 500 and Nasdaq both hit new records — Wall Street analysts and investors disagree on the direction of stock prices.

Nomura on Tuesday revised its year-end 2017 forecast for the S&P 500 upward to 2,400. (Analysts with Morgan Stanley cut their forecast to 2,380 on Tuesday, down from 2,520 earlier this month.) Nordea Markets lowered its 2018 outlook on Wednesday to 2,470, also up from 2,400.

Many of the changes are procedural, reflecting the yearly revision that has been typical of Wall Street for years. Other changes suggest a possible malaise in the markets, as investors adjust to the Trump administration’s economic agenda, which has faced consistent opposition from Congress. The stock market didn’t rally after the Trump administration’s tax bill passed Congress in December. The S&P 500 is down about 4 percent since the end of last year.

The last three times Wall Street analysts changed their outlooks on the S&P 500 at the end of the year, the subsequent 12 months were positive, according to FactSet. The average year-end forecast for S&P 500 earnings per share for 2018 is now in line with Nomura’s, at $193 per share, according to FactSet.

Other analysts are convinced that the market is up to something big. A report by Goldman Sachs on Wednesday predicted that the 10-year U.S. Treasury yield, now at 2.85 percent, would reach 3 percent “and maybe even 3.5 percent.”

Other analysts are less certain. Sal Tharani, managing director and chief investment officer of wealth and asset management for BMO Global Asset Management, put a more cautious view on the market when he spoke with The New York Times on Wednesday.

“I don’t know if the bull market is over,” Mr. Tharani said. “I do see trouble.”

Investors expect another volatility-filled year. The MSCI All Country World Index, which tracks stocks in 49 countries, declined about 5 percent in 2017, while the Dow rose more than 21 percent. The S&P 500 gained about 6 percent, and the Nasdaq rose 14 percent. In general, more risky stocks have risen more than safer stocks in 2017, according to Axios.

Mr. Tharani explained to The New York Times that after the Dow and S&P 500 hit new highs at the end of last year, investors looked at the day-to-day roller coaster as a sign that the market had been overvalued. Since then, investors have looked back, and have seen that the market has been stuck in a trend of falling gradually and slowly.

“This bull market is in the later stages of its run,” Mr. Tharani said. “It’s been this bull market for over 8½ years.”

And then there’s confusion from the British, too. In the minutes from the central bank’s January meeting, which was released on Wednesday, the Bank of England said that it would use “a moderate and gradual approach” to raising rates and also hinted that Brexit negotiations were a concern.

“A good deal remains on offer,” the minutes said. “But negotiations have reached a crossroads in the UK and EU position on the future economic relationship.”

In September, the BOE raised its key interest rate from 0.25 percent to 0.5 percent, and it was widely expected that it would raise it again in 2018. But on Wednesday, policymakers said it might be worth waiting a bit longer.

In the end, Wall Street will have to decide for itself. In the meantime, investors will have to deal with rumors and corrections.

Editor’s note: This story has been updated to update the history of the U.S. Treasury yield curve.

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