The year 2023 has proven to be a turbulent one for the stock market, with the S&P 500 index (^GSPC) experiencing significant fluctuations in value. Recently, the market witnessed a sharp decline, causing the S&P 500 to officially dip by 10% or more from its previous highs, thrusting it into what is commonly referred to as correction territory.
Investors, particularly those with bullish inclinations, are now grappling with apprehensions about the future trajectory of the stock market, and whether equities can regain the momentum they displayed earlier in the year. Chief Investment Strategist at Oppenheimer, John Stoltzfus, has closely monitored this recent market volatility, resulting in a revision of his price target for the S&P 500 from 4,400 to 4,900.
Stoltzfus clarified that Oppenheimer’s outlook on equities remains positive, but factors such as escalating yields and heightened geopolitical uncertainties prompted the adjustment of the price target, deeming it “more realistic and achievable at this juncture.” On August 1st, Stoltzfus had initially increased the year-end price target based on a more robust U.S. economy, substantiated by a steady expansion in the labor market and the United States posting its most impressive annualized growth in nearly two years.
However, as of the end of July, the stock market reached its zenith for the year. Since August 1st, both the S&P 500 and the Nasdaq Composite have witnessed declines exceeding 10% from their 2023 peaks, officially placing them in correction territory. Stoltzfus commented on this shift in market sentiment, indicating that “even as economic and corporate earnings resilience have persisted since the end of July, market sentiment soured on stocks as market-priced interest rates moved higher and geopolitical risk ramped up.”
He attributed this market reaction largely to the conclusion of accommodative monetary policies by the Federal Reserve, impacting highly-leveraged market participants who are now confronted with borrowing costs and diminished returns. Stoltzfus maintained that this recent downturn in stocks aligns with historical patterns during Fed hiking cycles, while also acknowledging the anticipated turbulence due to heightened tensions in the Middle East. He emphasized that valuations are approaching attractive levels, and currently, the robust economic backdrop remains a favorable factor for equities.
In agreement with Stoltzfus’ assessment, Keith Lerner, Co-Chief Investment Officer at Truist, expressed similar sentiments in a note titled ‘Pullback=Opportunity’. Lerner views the recent market pullback as a chance for investors who are underweight in equities to strategically increase their exposure. Despite the decrease in the S&P 500, both Stoltzfus and Lerner assert that the market continues to present ample opportunities for investors, provided they navigate judiciously.
Source: Yahoo Finance
