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'Sell Before May and Go Away': Wells Fargo expects S&P 500 to drop to 3700

AuthorSenad Karaahmetovic
Published 04/11/2023, 06:53 AM
Updated 04/11/2023, 07:01 AM
© Reuters. 'Sell Before May and Go Away': Wells Fargo expects S&P 500 to drop to 3700

By Senad Karaahmetovic

S&P 500 is likely to shift its direction in the coming days and likely correct 10% in the coming 3 to 6 months, Wells Fargo equity analysts told clients in today's note.

S&P 500 Futures are trading modestly higher in pre-market Tuesday and "within spitting distance of our 4200 SPX target," say the analysts.

Wells Fargo economists expect the U.S. to enter a recession in the second half of this year.

"We are maintaining our 2023 SPX price target of 4200, but believe the risk/reward over the next six months is skewed to the downside. Over the next 3-6 months, we expect to see a 10% correction, with the SPX trading down to 3700," the analysts added.

They believe several factors will trigger the downside in equities, namely: 1) aggressive monetary policy; (2) potential capital/liquidity issues catalyzed by the bank crisis; and (3) a consumer that is increasingly reliant upon credit to sustain spending.

"In this economic downturn we believe S&P500 net margins will contract by a little over 100bps y/y after a tremendous postpandemic run."

Wells Fargo's lower view of 2023E SPX net margin (11.2% vs prior 11.6%) is reflected in the slashed 2023 S&P 500 EPS estimate to $200 from the prior $210. For 2024, WF expects the S&P 500 to earn $213.

Latest comments

With all the CRAP going on in the World, investing in a Global Market is the last place to be.
Senad, you are a competent stenographer.
So is Wells Fargo analyst predicting a downgrade of Wells Fargo share prices?
you can almost smell when they are net short
There will be no squeeze with this power behind the shorts
Don't chase consensus...
Unless it's this deep. I doubt retail is going to beat all hedges and banks.
If they say this then it's going parabolic.
upwards
So they're straight up promoting trying to time the market. Sure lets sell now, to avoid a possible 10% dip over a couple months, and in return run the high risk of missing the bottom rebound, and spending the next couple years trying to play catch up. Sounds like a great financial advice. If you can't stomach a few months of 10% dip, put your money in a CD.
I've been shorting and I'm regretting. October was the bottom, it's been up for the last 6 months. Buy TQQQ 📈
the moral of your story may be that its better to look at the facts in front of you, namely the price action, rather than basing your trading on the news.
before these analysts were even allowed to publish their predictions, they should all have a proven track record of all their past predictions and how many % were right/wrong..
Maximum Doofus but you're wrong 100% of the time!
little jizzstain-jimmy staying up past his bedtime I see...
Agreed! And it makes patsies of the "reporters" who regurgitate these pronouncements without doing just what you suggest. They are not reporters, they are stenographers.
Why not buy  a S and P Bear ETF now?
It’s my position NEVER  to pay attention to the big guys and so called NEWS reporter. I try to analyze the charts and make my own decisions. Sometimes I’m right….sometimes wrong…..sometimes early …..sometimes late. Either way I have not relied upon the B S that comes from some person who is paid to say what he is TOLD to say. Is the S & P not due for a pull back…..check the charts. It does not take a wizard to figure that one out. Notice that these geniuses ALWAYS  give themselves a window of 6 to 9 months or so.
Definitely right that you shouldn’t listen to the “experts”. They’re a bit like horoscopes. If you find one prediction from one expert, you can easily find another from someone else saying the opposite thing.
3270 will be the bottom, then buy, buy, buy…
it will probably dip a bit further, but that's a good level.
Awfully specific number you have there. Not 3300, not 3200, not even 3250, but 3270?
we need some quantifiable ranking on these analysts. where we feel and we believe are not the determinate factors.
Welcome to Reality. My neighbor is an Insurance Salesman and he goes to France every other year for a "Salesman Conference" on the Insurance Companies Dime. Sounds like a Vacation to me. Couple of side trips to the Frence Countryside while he's there I bet. So .... In a time of INTERNET Face Time conferencing, I see the company is investing your money well. Just saying.
This is beautiful. Sell, put money in the bank, then the bank turns around and invests your miney and gives you 2% APY.
don't jump on the wagon on these sensationalist notes. but rather take note of those levels that they are giving you and observe, if a setup develops take it.
SP500 is manipulated by Dow Jones and Nasdaq. Either one fake rally will make SP500 rally too.
You must be an expert.
"....likely correct 10% in the coming 3 to 6 months, Wells Fargo equity analysts told clients in today's note."  -- so are these Wells Fargo analysts downgrading Wells Fargo by 10% as well?
Frauds just like the reports from short sellers like Hindenburg. Where is the SEC?
Hindenburg biggest fraud. short seller
 it's not fraud if they tells you upfront that they are short selling
whenever these banks want to buy on cheaper price they ask people to sell it so they can make big profit once market get down
Time will tell as always! A brave man always makes tonnes of money but also a brave man always lose money too.
And after May, a Summer rally.
thanks, I will just do the opposite thats how I was getting paid the last few years. So I will hold and sell end June or July
Market gets bullish becuase of these news
So ..... Who is this Wells Fargo equity analyst? Got a name? All institutions want your money regardless of the present or future market situation. Remember the movie "Trading Places"?. brokers get their commission regardless if you win or lose. Is this person starting a run on the banks or stocks? Do your own homework, invest directly, if possible, & never pay someone to Think for you. Happy Investing!
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