Wells Fargo Securities has officially released its forecast for the stock market in 2024. Chris Harvey, the head of equity strategy at the firm, has set a year-end target for the S&P 500 at 4,625, but he anticipates a volatile path to reaching that goal.
Harvey expressed caution about the market’s performance in the first half of the year, stating that it’s going to be “really, really sloppy.” He believes that the second half will be better, but overall, he is not overly optimistic. Despite setting a target of 4,625 for the S&P 500, Harvey does not see significant potential for much higher growth.
In his official 2024 outlook note to clients, Harvey advised preparing for a “trader’s market” rather than a “buy-and-hold situation.” He emphasized a risk-averse stance at the beginning of the year, warning that the VIX (CBOE Volatility Index) is up and indicating potential market pullbacks.
Harvey also highlighted the higher cost of capital as an additional market problem, putting pressure on multiples and preventing them from increasing further. Despite these challenges, he still sees opportunities for investors, particularly in areas that are currently oversold, such as utilities and healthcare.
In addition, Harvey suggested that Treasurys may be an attractive option in light of the market conditions. His 2023 S&P target is 4,420, implying a three percent drop from Monday’s close.
It is clear that Harvey’s outlook for the stock market is cautious, and he advises investors to approach the market with a sense of prudence and manage risk carefully.
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