The recent decline of the S&P 500 has raised concerns among stock market bulls about the future performance of stocks in 2023.
John Stoltzfus, Oppenheimer’s chief investment strategist, has revised his price target for the S&P 500 from 4,900 to 4,400. Stoltzfus previously had the highest year-end target among strategists tracked by Yahoo Finance.
In light of rising yields and geopolitical risks weighing on stocks, Stoltzfus believes the new target of 4,400 is more realistic and achievable at this time. However, Oppenheimer remains positive on equities.
On August 1, Stoltzfus raised his year-end price target to 4,900 due to a stronger-than-expected US economy. The labor market has been steadily growing, and the US recently reported its best quarterly growth in almost two years.
However, since August 1, both the S&P 500 and the Nasdaq Composite have declined over 10% from their 2023 highs and entered correction territory.
In a research note, Stoltzfus noted the irony of market sentiment souring on stocks despite the resilience of the economy and corporate earnings. He suggests that the recent downturn reflects a market tantrum by highly leveraged players who are adjusting to the new paradigm of higher interest rates and increased borrowing costs.
Stoltzfus believes that the recent downward movement in stocks is typical during a Fed hiking cycle and is also influenced by increased tensions in the Middle East. He sees valuations becoming attractive again and views the strong economy as a positive driver for equities.
Stoltzfus is not the only one who sees the recent corrections as an opportunity for investors. Keith Lerner, co-CIO at Truist, considers the pullback a chance to add to equities for investors who are underweight in this asset class.
Lerner expects a rebound in the market, with areas such as small caps and the S&P 500 Equal Weight Index potentially outperforming in the near term.
Josh Schafer is a reporter for Yahoo Finance.
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