Home NewsStock Market News Does Wall Street bulls raise the white flag and capitulate? | Anue Juheng- US Stock Radar

Does Wall Street bulls raise the white flag and capitulate? | Anue Juheng- US Stock Radar

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Does Wall Street bulls raise the white flag and capitulate? | Anue Juheng- US Stock Radar


It’s been a tough year for Wall Street forecasters, most of whom are forecasting a price target for the S&P 500 that is completely detached from reality amid the U.S. Federal Reserve’s aggressive rate hikes.

According to data compiled by the media, at the beginning of 2022, Wall Street’s average estimate of the year-end target price of the S&P 500 is 4,950 points, the highest estimate is 5,330 points, and the lowest is 4,400 points.

But with stocks lower for the year, most Wall Street strategists cut their price targets in tandem. Bank of America, Goldman Sachs, Morgan Stanley and others have not been shy about changing their views, downgrading forecasts along the way.

Currently, analysts’ average year-end target price for the S&P 500 is 4,054, with a high of 5,100 and a low of 3,200.

bulls abandon

The original most representative bulls also had to bow to reality. JPMorgan’s Marko Kolanovic admitted that he trimmed his overweight in stocks and underweight in bonds, citing increased central bank policy and geopolitical risks.

He originally had a target price of 4,800 for the S&P 500 by the end of the year, but now believes that target will not be reached until the end of 2023.

Oppenheimer set a year-end target of 5,330 at the start of 2022, making it one of the most optimistic institutions on Wall Street. Now, for the second time in three months, strategist John Stoltzfus has cut his year-end target price for the S&P 500 to 4,000.

A combination of subdued sentiment, persistent inflation and uncertainty around corporate earnings contributed to the downward revision.

A reverse signal appears?

The capitulation of some of Wall Street’s most bullish forecasters is actually a contrarian signal that the market may be nearing a bottom.

Bank of America’s Savita Subramanian tracks a sell-side equity metric, which is used only to gauge the relative bullishness of Wall Street strategists, and that forward stock market returns have been at all-time highs when Wall Street is less bullish about the future.

One of the few holding on to bullishness right now is Fundstrat’s Tom Lee, who has been refusing to cut his year-end price target of 5,100, implying a potential upside of 39% from current levels.

Lee sees a year-end rally still in place given favorable seasonality, investor overly bearish sentiment, and the possibility that inflation has passed its peak.

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