U.S. equities seem to be losing steam again, with the S&P 500 index down 5.0% over the past two weeks. Still, Citi’s Scott Chronert remains moderately positive on the market.
Chronert defends his moderately bullish call on CNBC
According to the U.S. equity strategist, the benchmark could be up roughly 7.0% from here by the end of the year. Speaking with CNBC’s Sara Eisen on “Closing Bell”, he said:
Market’s been fairly resilient since the Fed’s first rate hike. We are still moderately positive for the rest of the year. We think we can get to 4,700 in SPX by the end of the year and I think earnings are going to be the driver of that.
He, however, forecasts the terrain to the 4,700 level to be a volatile one, considering monetary tightening and the ongoing geopolitical tensions.
What kind of stocks will work in this environment?
Such a macroeconomic environment, as per Chronert, warrants that investors turn back to quality names with pricing power to hold up against the inflationary pressures. He noted:
We’ve highlighted quality as the factor that we want to be attentive to. It helps us navigate a mixed value versus growth circumstance. What you get with quality is more pricing power. That’s an appropriate approach to navigate this period of volatility.
The U.S. Federal Reserve is expected to raise rates by 50 bps and start reducing its balance sheet by $95 billion a month in May. Earlier this week, Requisite’s Talkington said a zero return this year would still be a great return.
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Source: https://invezz.com/news/2022/04/15/citi-analyst-spx-could-climb-back-to-4700-by-the-end-of-the-year/