Miller: Financials will drive S&P 500 in 2011

Financial stocks could deliver over 25% of the earnings growth of America's leading index over the next 12 months, says Bill Miller, the chairman of Legg Mason Capital Management.

  The manager of the $4bn Value Trust says the financial sector will be a key driver of incremental earnings growth in 2011 because US large caps cut costs aggressively during the financial crisis. "To date, both cost cutting and revenue growth have contributed to earnings which have continued to beat expectations this year," Miller says. "The direction of the market is highly correlated with the direction of earnings. Consensus expectations for the next two years are still comfortably positive." The manager expects the S&P 500 to rise as much as 15% this year, he adds. Finan...