The US stocks are headed for a difficult end to the year after the rebound recorded in November and amid a fluctuation in bond yieldsaccording to Michael Wilson of Morgan Stanley.
The strategist, who maintained a broadly bearish stance this year even as the S&P 500 rose nearly 20%, said in a note that December could bring “short term volatility in both rates and stocks” before more constructive seasonal trends, as well as the so-called “January effect”, support the actions next month.
The benchmark S&P 500 index advanced about 9% last month, one of its best rallies for a November month in a century due to the optimism that interest rates They would have reached their maximum level. That has left the index in overbought territory, a technical level which is generally considered precursor to a liquidation.
Wall Street: what is expected for 2024
Even so, the called MACD impulse of the S&P 500 that shows the relationship between two moving averages of the price of a security remains positive, since a slowing economy and a inflation drop encourage bets that the Federal Reserve could begin reducing rates in March. The chairman of the Federal Reserve, Jerome Powell On Friday he dismissed expectations of cuts in the first half of 2024.
Wilson said that while investors had discounted several times in the last year that the Federal Reserve would adopt a more expansive policy, this time they have shown “greater support”, since they expect it to develop “in the midst of a still healthy macroeconomic context.” That scenario “would be the more optimistic result for stocks”, wrote the strategist.
Other Wall Street forecasters have also expressed optimism about the outlook for U.S. stocks next year, with those at Bank of America Corp, Deutsche Bank Group AG and RBC Capital Markets predicting a record high for the S&P 500. Wilson remains broadly neutral. for the year, as it expects the index to end 2024 at around 4,500 points, about 2% below current levels.
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