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JPMorgan’s Marko Kolanovic expects the S&P 500 to fall 23% by the tip of 2024.
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Kolanovic lays out what must occur for shares to keep away from this grim consequence.
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Different strategists have turned extra bullish not too long ago because the market powers on to new data.
Wall Road’s greatest bear is not budging on his dour outlook for the inventory market at the same time as the key indices proceed to hit report highs.
However JPMorgan chief international markets strategist Marko Kolanovic is providing buyers a “what may go proper” state of affairs that will stop his bearish outlook from coming to fruition.
Kolanovic has a 2024 year-end S&P 500 worth goal of 4,200, which represents potential draw back of 23% from present ranges in addition to the bottom worth goal on Wall Road.
“Our cautious stance has been based mostly on our view that there is no such thing as a re-rating upside, and that any upside needed to subsequently come from earnings progress, which we see being inadequate to tackle fairness danger even below finest case state of affairs assumptions,” Kolanovic mentioned in a be aware on Monday.
Kolanovic has forecasted subpar earnings progress for the S&P 500, suggesting the index’s earnings per share will solely be $225 in 2024 in comparison with $221 in 2023.
That’s nicely beneath Wall Road forecasts of $240 per share and beneath the S&P 500’s trailing 12-month earnings per share of $228 per share, in keeping with information from Bloomberg.
Here is what has to occur for the inventory market to keep away from a 20% sell-off, in keeping with the be aware.
“For equities to keep away from a 20%+ correction, you must consider that tech will change into a way more significant driver of progress for the broad financial system in brief order,” Kolanovic mentioned.
However Kolanovic just isn’t shopping for that bullish outlook and as a substitute recommends buyers keep affected person earlier than placing money to work.
“Whereas we consider tech will proceed to be the important thing driver of financial progress for years to return, we do not suppose its influence on company P&Ls throughout the board will likely be that profound so all of the sudden, and so we stay cautious right here, anticipating financial progress to weaken, equities to right, and buyers to discover a higher entry level,” he wrote.
Kolanovic’s bearish place on the inventory market wasn’t at all times so lonely, however not too long ago a refrain of extra bearish inventory strategists have modified their tune.
On Monday, Evercore ISI strategist Julian Emanuel elevated his S&P 500 worth goal to a street-high 6,000 from his prior goal of 4,750, representing a 26% swing.
Final month, Morgan Stanley CIO Mike Wilson, who had lengthy held a bearish view of the inventory market, turned bullish and elevated his S&P 500 worth goal to five,400 from his prior goal of 4,500.
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