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Scott Chronert, Citi U.S. equity strategist, raised the S&P 500 price target for end-2023 to 4000 from 3900, which implies a “flattish performance” from current levels.
The strategist says the market is increasingly focused on the recession risk in 2023.
“This may be the most widely anticipated recession in decades,” Chronert wrote in a client note.
It is still premature to “call an all clear for the S&P 500,” the strategist added. The next pullback in stocks is likely to be fueled by an earnings reset, economic deceleration, and the Fed’s persistent hawkish commentary.
Ultimately, the S&P 500 will weaken with the pullback offering a buying opportunity.
“Still, we believe the June and October lows should hold. In turn, more confidence that Fed Funds could peak toward the end of Q2 2023 should mitigate severe recession fears. This drives our mid-year 3700 target,” Chronert added.
Ultimately, the S&P 500 should move higher in the second half of 2023 as the focus will shift toward 2024, which explains Citi’s 4000 year-end target.
“Longer-term, we still expect a fairly muted global recovery characterized by ongoing inflation and interest rate constraints, and only moderate earnings growth. This makes 2023 a year of trading opportunities, less so the true beginning of the next raging bull market,” the strategist concluded.
