Wells Fargo stated in its 2024 market outlook report that next year will be pivotal for the economy and markets. At the same time, the financial institution highlighted that it believes that a global flexibility is on the horizon that will then An upward reversal will follow in the second half of 2024.
“We anticipate a continued global economic slowdown, followed by a gradual U.S.-led recovery in the latter part of 2024,” Wells Fargo said.
The bank went on to say, “Once investors begin to anticipate an economic and earnings recovery, we expect the S&P 500 index to advance toward the end of the year.” Wells Fargo said regarding its 2024 year-end target for the S&P 500 (SP500), it sees the index at between 4,600 and 4,800. For reference, as of Thursday the benchmark index and its reflected ETFs (NYSEARCA:SPY), (NYSERCA:FLIGHT), and (NYSERCA:IVV) stand at 4,575.
Supporting the second half of 2024 rally, Wells Fargo flagged the likelihood that the Federal Reserve will begin cutting rates, which in turn will ease borrowing costs for households and businesses. “Lower interest rates and households with new purchasing power should drive spending, inventory rebuilding and an economic recovery, at least through the end of 2024, and probably beyond.”
From an investment standpoint, Wells Fargo said it maintains a defensive position as it prefers high-quality assets. The financial institution also made clear that as market participants look beyond the economic slowdown, it anticipates a shift toward more cyclical positions.
