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Don't chase this rally in S&P 500, Wells Fargo tells its clients

Published 11/16/2023, 06:31 AM
Updated 11/16/2023, 06:34 AM
© Reuters.  Don't chase this rally in S&P 500, Wells Fargo tells its clients
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Markets have been dealing with heightened volatility in recent weeks and months. The S&P 500 dropped to about 4100 before adding 10% in a matter of days.

Against this backdrop of high volatility, analysts at Wells Fargo urged long-term investors to stay patient.

Instead of chasing rallies, which Wells Fargo is advising its clients not to do, investors should “wait for the market to provide opportunities to put cash to work.”

Analysts see the S&P 500 finishing 2024 in the range of 4600-4800.

“The good news is the higher than current levels and well above where we think the index is likely to finish this year,” the strategists wrote in a client report.

“The bad news is it is likely to be a bumpy ride between now and the end of next year. The market rarely moves up in a smooth, consistent manner, which can give market participants indigestion from time to time.”

In the near term, the banking giant projects the S&P 500 will trade in the range of 4100-4600.

“We do not want to chase this rally as headwinds still exist,” analysts added.

“We do not see the risk-reward as attractive at current levels. Headwinds include higher long-term interest rates, worsening geopolitical tensions, and a slowing economic and corporate earnings outlook.”

Instead, the trades should wait for pullbacks in U.S. large-cap stocks, especially those in sectors like Industrials, Materials, and Health Care.

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