(Bloomberg News) Wall Street strategists say the Standard & Poor's 500 Index, after falling within 1 percent of a bear market this week, will post the biggest fourth-quarter rally in 13 years even after they cut forecasts at a rate exceeded only during the credit crisis.

The benchmark index for U.S. stocks will climb 14 percent from yesterday to end 2011 at 1,300, according to the average estimate of 12 strategists surveyed by Bloomberg. The last time they were this bullish in October was 2008, when the group predicted a 27 percent gain and the index lost 18 percent.

Analysts from Oppenheimer & Co. to UBS AG and Barclays Plc say equities will rebound from a decline of 19 percent since April as policy makers prevent a default by Greece and profit in the S&P 500 climb to $95.85 a share in 2011. Europe's worsening debt crisis and the U.S. government's loss of its AAA credit rating led strategists to cut their S&P 500 forecast in the past two months from an average level of 1,401.

"Investors are way too bearish and are being swayed by macro variables," Brian Belski, the New York-based chief investment strategist at Oppenheimer, wrote in an e-mail on Oct. 4. "Fundamentals drive stocks," he said. "U.S. portfolios are not positioned for a positive third-quarter earnings season."

A report showing U.S. services industries expanded faster than economists predicted in September and speculation Europe will contain losses tied to sovereign debt pushed the S&P 500 up 1.8 percent to 1,144.03 yesterday. After falling to 1,074.77 intraday on Oct. 4, the index has surged 6.4 percent. The S&P 500 fell 0.6 percent to 1,137.32 at 9:55 a.m. in New York today.

Belski is sticking to his forecast from December that the S&P 500 will end this year at 1,325, up 16 percent from yesterday's closing level. When he gave his prediction, the average strategist projection for the end of 2011 was 1,379, according to data compiled by Bloomberg.

Strategists shouldn't be so optimistic given the severity of the European debt crisis, said Eric Teal, chief investment officer at First Citizens Bancshares Inc., which manages $4 billion in Raleigh, North Carolina.

"The best case is we establish a foundation with some modest gains in the fourth quarter, but it's too optimistic" to expect a rally, he said. Strategists "need to better assess the European debt situation," Teal said in a telephone interview yesterday. "The general trend is downward."

Goldman Sachs Group Inc.'s David Kostin cut his price estimate for the S&P 500 in 2011 this week for the third time in three months, reducing it to 1,200 from 1,250. While the U.S. will likely avoid a recession, the economic recovery is stagnating, according to the equity strategist.

"The unstable macro environment is likely to persist for the foreseeable future," Kostin wrote in an Oct. 4 report. "Investors believe a non-trivial probability exists that the crisis will trigger a global financial dislocation similar to 2008."