By Karishma Vanjani
Wall Street pessimists have had a tough run this year as stocks chase one high after another. But one bear is holding firm. JPMorgan Chase's Marko Kolanovic doubled down on his negative stance this past Monday, right after Morgan Stanley's Mike Wilson abandoned his bearish outlook by upping his 12-month S&P 500 target from 4500 to 5400.
Kolanovic says he doesn't see stocks as "attractive investments," expecting the S&P 500 to drop to 4200 by December from the current 5300, citing restrictive rates, inflation, and stress on lower-income consumers. The strategist was too bullish in 2022 and too bearish in 2023. Now Kolanovic sees the market falling at least 20%, making him the most prominent big-bank bear. Since October 2022, the S&P 500 has hit more than 20 new highs.
Bank of America strategists expect the S&P 500 to end the year at 5400; Deutsche Bank says 5500. Wall Street's most optimistic estimate, by Wells Fargo, has stocks up 17% this year. Meanwhile, Citigroup's Scott Chronert and Goldman Sachs' David Kostin have lower targets than current levels, pointing to a moderate cooling rather than an outright bear market.
While Kolanovic acknowledges his bearishness has "hurt the performance of our multi-asset portfolio," allocating more to commodities, where prices have gained, has partly offset that, he adds.
Last Week
Markets: Oil shrugged off the death of Iranian President Raisi in a helicopter crash. U.K. inflation fell to 2.3%, less than expected. Stocks hit highs early in the week, Nvidia's results and guidance were knockouts, but hawkish Federal Reserve minutes and inflation fears took their toll. On the week, the Dow industrials fell 2.33%, the S&P 500 inched up 0.03%, and the Nasdaq Composite rose 1.41%.
Companies:JPMorgan Chase CEO Jamie Dimon said the timetable for his retirement "isn't five years anymore." Dimon has a big option award in 2026. Barron's owner News Corp struck a content deal with OpenAI worth $250 million. The Justice Department and two dozen states sued to break up concert giant Live Nation. The SEC approved ether-based exchange-traded funds. FDIC chief Martin Gruenberg said he would quit when a successor is named at the agency, which was hit by sexual harassment claims.
Deals: Red Lobster, apparently done in by its "endless shrimp" promotion, filed for Chapter 11...Bloomberg reported that Elliott Investment Management amassed a billion-dollar stake in Johnson Controls... Anglo American agreed to talk to BHP Group after rejecting its $49 billion bid, its third. Anglo criticized the complex deal BHP proposed... DuPont said it would split into three companies as CEO Ed Breen retires.
Milestone: Ivan Boesky, whose insider trading conviction led to the fall of Michael Milken in the 1980s, died at 87.
Next Week
Monday 5/27
Equity and fixed-income markets are closed in observance of Memorial Day.
Tuesday 5/28
The T+1 settlement cycle goes into effect for securities transactions from U.S. financial institutions. This means that if you purchase or sell securities such as stocks, bonds, or exchange-traded funds, the money will be debited or credited to your account, and the transaction settled, in one business day, rather than two previously.
Wednesday 5/29
Only two megacap companies report earnings for the week. Salesforce announces quarterly results on Wednesday, and Costco Wholesale does the same on Thursday.
Friday 5/31
The Bureau of Economic Analysis releases the personal consumption expenditures price index for April. Consensus estimate is for the PCE price index to increase 2.7% year over year. The core PCE, which excludes volatile food and energy prices, is expected to rise 2.8%. Both estimates would match the March data. The core PCE, the Federal Reserve's favored inflation gauge, is at its lowest level since March of 2021, but still above the Fed's target of 2%.
Write to Karishma Vanjani at karishma.vanjani@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
May 24, 2024 19:14 ET (23:14 GMT)
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