Wall Street Still Baffled About Markets

Wall Street Still Baffled About Markets

Investors looking for clarity on where stocks will go won’t find it from professional forecasters, according to an article in the LA Times.

Out of 21 forecasters tracked by Bloomberg, 12 expect the S&P 500 index to fall into the holiday season, with the spread between highest and lowest target at 24%.

As the pandemic threatens to slow the global recovery, strategies that worked over the last year could now be out of date. And while sky-high valuations and the robust rally from the pandemic low justify high prices, some analysts believe the recovery faces too many obstacles, from inflation to President Biden’s proposed tax hike.

The S&P fell the most in more than a month last week, led by companies that benefit from a pickup in economic activity such as energy producers and financial firms. This dwindling of outperformance has been nearly in lockstep with the surge of the Delta variant. The unpredictability has led some strategists to decline making another forecast and analysts at Goldman Sachs and JPMorgan both downgraded their year-end targets for 10-year yields.

Rather than trying to predict where the market will go, Julie Biel at Kayne Anderson Rudnick told Bloomberg Television that it’s better to prepare by focusing on companies that have a track record of doing well in troubled times: “It’s more what businesses can do well even if the economy is struggling, and those are just the quality businesses that you look for.”

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