NEW YORK: The S&P 500 Index is set to rise toward its all-time high early next year, pullback mid-year and then rally back toward the highs, according to strategists at Societe Generale SA.
A team led by Manish Kabra sees the benchmark for US equities jumping toward 4,750 in the first quarter and then dropping to 4,200 mid-year as a mild recession ensues.
That 12% drop will mark a buying opportunity, the firm said, as the Federal Reserve cuts interest rates, sparking a modest economic recovery that propels the index back to 4,750 in the final three months of the year.
It rose 0.4% on Monday to 4,533 as of 12:45pm in New York.
“The S&P 500 should be in ‘buy-the-dip’ territory, as leading indicators for profits continue to improve,” Kabra wrote in his annual US equity outlook to clients.
“Yet, the journey to the end of the year should be far from smooth” he added, citing an economic downturn, a looming credit selloff, and ongoing quantitative tightening as hurdles traders still need to face.
The S&P 500 last hit a record of 4,796 on Jan 3, 2022.
SocGen’s forecast resembles others on Wall Street, which see clarity around the outlook for US growth next year buoying stocks – but not before more volatility.
Morgan Stanley’s Mike Wilson – among the Street’s staunchest bears – said near-term uncertainty will give way to an eventual earnings recovery in 2024. — Bloomberg