Wells Fargo Securities is formally out with its 2024 inventory market forecast.
Chris Harvey, the agency’s head of fairness technique, sees a unstable path to his S&P 500 to 4,625 year-end goal.
“It is actually laborious to get excited. If we have now higher [economic] development, then the Fed does not do something,” he informed CNBC’s “Quick Cash” on Monday. “If we have now worse development, then numbers are going to return down after which the Fed will ultimately minimize. The second half might be higher, however the first half goes to be actually, actually sloppy.”
Harvey’s goal is simply 75 factors above Monday’s S&P 500’s shut.
“Can we go larger from right here? Certain, we will go a bit bit larger. However I simply do not assume you may go a ton larger,” he mentioned. “Individuals have talked about 5,000. I do not see the way you get to that degree.”
In his official 2024 outlook word, Harvey informed shoppers to brace for a “dealer’s market” as an alternative of a “buy-and-hold scenario.” His early 12 months technique: Begin with a risk-averse stance.
“The VIX [CBOE Volatility Index] is up 13. Each time we have gone into a brand new 12 months with the VIX at 13, we have seen spikes. We have seen the fairness market pull again, and it is simply not a terrific setup into 2024,” Harvey added.
He warns the upper value of capital is an extra market downside as a result of it prevents multiples from going larger.
“So long as the price of capital stays larger, it is actually laborious for me to get to a a lot larger worth goal,” Harvey mentioned.
But, he nonetheless sees alternatives for traders.
“What we need to do is we need to go to the locations which might be oversold. We simply upgraded utilities right now. We upgraded well being care,” Harvey famous. “These are areas which have good valuations, first rate fundamentals and most of the people actually aren’t there at this level.”
‘I hate to say that as being head of fairness technique’
Harvey additionally sees Treasurys as an possibility.
“For those who take a look at the options, there are issues which might be fairly enticing. And, I hate to say that as being head of fairness technique, however you may park cash on the entrance of the curve and make a fairly good fee of return and never placed on an entire lot of threat,” mentioned Harvey.
His 2023 S&P goal is 4,420 — which means a 3 % drop from Monday’s shut.
Disclaimer