A staff of strategists at UBS Group’s wealth-management arm has lifted its 2024 worth goal for the S&P 500, becoming a member of a rising refrain on Wall Street that expects shares to succeed in report territory earlier than the tip of the yr.
See: Betting grows that S&P 500 will hit report excessive, with Oppenheimer becoming a member of Wall Street’s bullish requires 2024
“We now have higher conviction in our base case of an economic soft landing and see the Fed cutting rates four times this year, likely starting in May. We have raised our December S&P 500 target to 5,000, providing 6.4% upside from Friday’s closing price of 4,697,” mentioned Mark Haefele, chief funding officer at UBS Global Wealth Management, in a be aware shared with MarketWatch on Monday.
That would mark a achieve of round 6.5% from Friday’s shut. The S&P 500 rose greater than 24% in 2023, ending Dec. 29 simply 0.6% under its report shut of 4,796.56 set on Jan. 3, 2022.
Haefele and his staff based mostly their revision partly on Friday’s jobs report. Although the information confirmed the U.S. economic system added greater than 200,000 jobs in December, numbers from the prior two months have been revised decrease by 71,000. And whereas common hourly earnings rose by greater than anticipated, the information confirmed the typical variety of hours labored declined, bolstering expectations that rising wages received’t contribute to a reacceleration of inflationary pressures.
“We see reasons to expect wage growth to fall further. Data released earlier last week showed the share of workers quitting their jobs fell to 2.2% in November, based on the JOLTS survey, below its prepandemic level. This may suggest that workers are becoming less confident in their ability to jump to better roles with higher pay,” the usteam mentioned.
With unemployment nonetheless under 4%, UBS expects consumption to stay robust. Economists had anticipated the unemployment charge to tick as much as 3.8% in December, but it surely got here in regular at 3.7%. This is a vital think about UBS’s financial calculus.
“We still expect a moderate rise in the jobless rate in 2024, but we don’t expect an increased fear of unemployment to cause a sharp rise in rainy-day savings and a correspondingly sharp reduction in household consumption,” Haefele and his staff mentioned.
Despite the robust headline studying on job creation, the usteam mentioned “we continue to see a trend toward gradual cooling. This helps explain why Friday’s initial negative reaction in bond and equity markets was later reversed.”
The staff suggested UBS shoppers who’re nonetheless holding a considerable quantity of their portfolio in money to place their cash to work shortly, recommending long-dated bonds that includes yields which can be enticing relative to current historical past.
What’s extra, the usteam favors corners of the inventory market which can be more likely to outperform throughout a interval of tepid financial development. They really useful traders deal with high quality shares, investing in corporations with robust stability sheets and a repute for delivering earnings development.
U.S. shares fell final week, snapping a nine-week successful streak that was the longest for the S&P 500 in practically 20 years, in response to Dow Jones Market Data. Analysts have blamed a number of elements for driving shares’ pullback through the first buying and selling week of 2024.
See: How the 2023 ‘everything rally’ is unwinding within the new yr
U.S. shares opened blended on Monday, with the S&P 500
SPX
up 0.2% at 4,704, and the Nasdaq Composite
COMP
up 0.7% at 14,620. The Dow Jones Industrial Average
DJIA
was off by 186 factors at 37,282, as shares of Boeing Co.
BA,
slumped, weighing on the blue-chip gauge.
See: Shares in Boeing droop, provider Spirit AeroSystems tanks, after panel blows out
Source web site: www.marketwatch.com
