February 3, 2023

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Why a top Wall Street quant sees S&P 500 taking back all its losses by year’s end

2 min read

JP Morgan’s Marko Kolanovic, one of the most closely followed quantitative analysts on Wall Street, augured in a note to clients on Wednesday that U.S. stocks could see a torrid rebound during the latter half of 2022.

While Kolanovic’s boss (JPM CEO Jamie Dimon) helped spook markets on Wednesday with his talk of an economic “hurricane”, the JPM quant recounted the reasons why the latest rebound in stocks could continue, even as U.S. equities finished Wednesday’s session slightly lower. According to him, May could serve as a “template” for stocks during the balance of the year.

As a reminder, bearish comments from Dimon and St. Louis Federal Reserve Bank President James Bullard contributed to the selloff in stocks (among other factors), driving the S&P 500
down 0.8%, while the Dow Jones Industrial Average
lost 0.5% and the Nasdaq Composite
dropped 0.7%. That left the S&P 500 down 14% for the year to date.

He also noted that his bullish call is “out-of-consensus” on Wall Street, although strategists across Wall Street have raised their year-end targets for stocks in recent weeks. According to FactSet data, the present median year-end forecast for the S&P 500 is north of 5,000, which is well above where the equity benchmark is presently trading.

“Despite the steep selloff, we believe that markets will recover YTD losses and result in a broadly unchanged year,” Kolanovic wrote.

Kolanovic cited a few factors that helped drive the raucous equity bounce that helped spur the S&P 500 and Dow to finish May with tiny gains (while the tech heavy Nasdaq Composite lagged behind the broader market and finished roughly 2% lower).

  • First, there were measured comments from Federal Reserve officials – most notably Atlanta Fed chief Raphael Bostic – who raised the possibility of a “pause” in the…

2022-06-01 21:42:00

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