Investors should seize on the powerful 2023 year-end rally in stocks and bonds, and add value to their portfolios in other ways over the next six to 18 months, according to the Wells Fargo Investment Institute. The Dow Jones Industrial Average
DJIA
already carved out a handful of record closes in the second half of December, the S&P 500 index
SPX
has nearly reclaimed record territory and the 10-year Treasury yield
BX:TMUBMUSD10Y
has dropped over 100 basis points to 3.88%, from a 16-year high of 5% in October.
“These significant price moves have occurred as market participants appear to be hanging their hats on strong earnings growth, lower inflation, and aggressive Federal Reserve (Fed) rate cuts in 2024,” said Scott Wren, senior global market strategist at the Wells Fargo Investment Institute, in a Wednesday client note. Wren’s team remains skeptical about S&P 500 earnings increasing by as much as others expect, and about the Fed cutting its policy rate by as much as federal funds futures suggest. Rather than chase the S&P 500, which already trades above his team’s midpoint target of 4,700 for the end of 2024, Wren thinks there are others ways investors could add value to their portfolios. Wren argues that investors should trim exposure to the S&P 500’s information technology, consumer discretionary and communication sectors, which have outperformed in 2023, and take those proceeds over to other stock-market sectors, including healthcare, industrials and materials. With any excess funds, short-term fixed income looks like “a good place to ‘park’ …
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DJIA
already carved out a handful of record closes in the second half of December, the S&P 500 index
SPX
has nearly reclaimed record territory and the 10-year Treasury yield
BX:TMUBMUSD10Y
has dropped over 100 basis points to 3.88%, from a 16-year high of 5% in October.
“These significant price moves have occurred as market participants appear to be hanging their hats on strong earnings growth, lower inflation, and aggressive Federal Reserve (Fed) rate cuts in 2024,” said Scott Wren, senior global market strategist at the Wells Fargo Investment Institute, in a Wednesday client note. Wren’s team remains skeptical about S&P 500 earnings increasing by as much as others expect, and about the Fed cutting its policy rate by as much as federal funds futures suggest. Rather than chase the S&P 500, which already trades above his team’s midpoint target of 4,700 for the end of 2024, Wren thinks there are others ways investors could add value to their portfolios. Wren argues that investors should trim exposure to the S&P 500’s information technology, consumer discretionary and communication sectors, which have outperformed in 2023, and take those proceeds over to other stock-market sectors, including healthcare, industrials and materials. With any excess funds, short-term fixed income looks like “a good place to ‘park’ …nnDiscussion:nn” ai_name=”RocketNews AI: ” start_sentence=”Can I tell you more about this article?” text_input_placeholder=”Type ‘Yes'”]