Wells Fargo sees economic 'soft patch' capping further S&P 500 gains
Wall Street week ahead: Investors eye key US economic data, OPEC+ meet While the US economy is slowing, it has not deteriorated enough to justify the Federal Reserve beginning to cut interest rates, the firm noted. As a result, the economy will likely suffer from the squeeze of tighter credit longer than markets appear to anticipate, it said.
"It is our belief that equity rallies will be capped until a path to an economic and earnings recovery becomes clear," the firm noted, adding that it suggests investors add to large-cap technology stocks if the S&P 500 falls near the bottom of its range for the year. Market looks steady as global equities head towards big monthly gains The benchmark S&P 500 is up more than 10% over the last three weeks as Treasury yields have fallen from 16-year highs following signs of cooling inflation and a weakening labor market, helping boost valuations in technology and other growth sectors.
It hit a high for the year in late July as predictions of an imminent recession sank Treasury yields. The Atlanta Fed's GDPNow estimates show US gross domestic product growing at a 2.1% annualized rate in the fourth quarter, down from a third-quarter reading of 5.1% in early October.
Overall, futures markets anticipate a 22% chance that the Fed begins cutting rates in March, up from a 13.7% chance seen a month ago, according to CME's FedWatch Tool. A re-acceleration of the global economy in the second half of 2024 will likely push stocks higher as a weakening dollar and falling interest rates spark a global risk rally, Wells Fargo said.Milestone Alert!
Livemint tops charts as the fastest growing news website in the world
