February 22, 2024

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’s actually exhausting to get excited. If we now have higher [economic] progress, then the Fed doesn’t do something,” he instructed CNBC’s “Quick Cash” on Monday. “If we now have worse progress, then numbers are going to come back down after which the Fed will ultimately minimize. The second half shall 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 increased from right here? Certain, we will go slightly bit increased. However I simply don’t assume you may go a ton increased,” he mentioned. “Individuals have talked about 5,000. I don’t see the way you get to that stage.”

In his official 2024 outlook be aware, Harvey instructed purchasers to brace for a “dealer’s market” as an alternative of a “buy-and-hold scenario.” His early yr technique: Begin with a risk-averse stance.

“The VIX [CBOE Volatility Index] is up 13. Each time we’ve gone into a brand new yr with the VIX at 13, we’ve seen spikes. We’ve seen the fairness market pull again, and it’s simply not an awesome setup into 2024,” Harvey added.

He warns the upper value of capital is an extra market drawback as a result of it prevents multiples from going increased.

“So long as the price of capital stays increased, it’s actually exhausting for me to get to a a lot increased value goal,” Harvey mentioned.

But, he nonetheless sees alternatives for traders.

“What we wish to do is we wish to go to the locations which are oversold. We simply upgraded utilities at this time. We upgraded well being care,” Harvey famous. “These are areas which have good valuations, respectable 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 choice.

“For those who take a look at the alternate options, there are issues which are fairly engaging. 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 p.c drop from Monday’s shut.