Source: Jin10 Data
JPMorgan analysts pointed out that the price target for the S&P 500 index at the end of 2024 is 4200 points.
Despite the major stock indexes in the United States continuing to hit historic highs, the most bearish on Wall Street remain pessimistic about U.S. stocks.
JPMorgan's global chief strategist, Marko Kolanovic, has set a price target of 4,200 for the S&P 500 index by the end of 2024, which not only represents a 23% potential decline from current levels but is also the lowest price target on Wall Street.
However, Kolanovic has provided investors with a scenario of 'what could go right' to prevent his bearish outlook from becoming a reality.
Kolanovic said in a report on Monday, 'Our cautious stance is based on the following view: any rise in U.S. stocks must come from earnings growth, and we see that even under the best-case scenario, earnings growth is not sufficient to offset downside risks in U.S. stocks.'
Kolanovic predicts that earnings growth for the S&P 500 index will be below average, suggesting that earnings per share for the index in 2024 will only be $225, compared to $221 in 2023. This is well below the Wall Street forecast of $240 per share and the average earnings of $228 per share for the S&P 500 index over the past 12 months.
The following are the conditions required for U.S. stocks to avoid a 23% pullback, according to the report:
Kolanovic said, 'To keep U.S. stocks from correcting more than 20%, you have to believe that the technology sector will become a key driver of broader economic growth in the short term.' However, Kolanovic does not subscribe to this optimistic view and instead advises investors to be patient before putting in cash.
He writes, 'Although we believe that the technology sector will continue to be a key driver of economic growth in the coming years, we do not think that its impact on corporate profits and losses across all industries will suddenly and significantly deepen. Therefore, we remain cautious and expect the U.S. economic growth to slow, U.S. stocks to correct, and investors to find better entry points.'
Kolanovic's bearish stance on U.S. stocks is not always so isolated, but recently some more pessimistic stock strategists have changed their views.
On Monday, Evercore ISI strategist Julian Emanuel raised his price target for the S&P 500 index from his previous target of 4,750 to 6,000.
Last month, Morgan Stanley's chief investment officer, Mike Wilson, who has long held a bearish view on the U.S. stock market, became optimistic and raised his price target for the S&P 500 index from his previous target of 4,500 to 5,400.
Editor/Lambor