Don't chase the rally in stocks because a recession is coming and current earnings estimates are too high, a Wells Fargo strategist says
It's probably not a good idea to chase the current rally in US stocks, because a recession is fast approaching, according to Wells Fargo's senior global equity strategist.
US equities have rallied this year despite analysts warning of an oncoming economic downturn, buoyed in part by expectations that cooling inflation will allow the Federal Reserve to reverse some its interest-rate increases. Annual gains in consumer prices slowed to 4% in May, from as much as 9.1% in mid-2022.
The S&P 500 index has climbed almost 14% so far in 2023 to about 4,370. Wren expects the gauge to climb to 4,700 by end-2024, but warns the market will see some volatility in the interim period.
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