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Despite several top strategists calling for the continuation of U.S. stocks selloff into the end of 2022, Citi U.S. Equity Strategist Scott Chronert reaffirmed the bank’s 4200 year-end target.
Chronert urged clients to watch 3650 level this week in the S&P 500 as the soaring U.S. dollar, aggressive Fed tightening, and negative earnings revision, continue to weigh on the sentiment.
“Whether [3650] it holds or not, our base view is that earnings resilience will continue during the Q3 reporting period. We don’t see a specific macro catalyst in the immediate future,” Chronert wrote in a client note.
Chronert’s against-consensus play sees the S&P 500 enjoying a risk-on rally “at some point during Q4,” which should take the index closer to Citi’s price target.
“Admittedly, this will require some modest change in perception re: the Fed’s current hawkish commentary. 1H ’23 recession remains our base case. There, our year earnings expectations remain too optimistic and will need to be reined in. But, this should be well anticipated at this point,” the strategist concluded.
Chronert’s colleague at Morgan Stanley, Michael Wilson, called today for a drop to 3000-3400 in the S&P 500 later this fall.
