Oppenheimer’s top markets guru has just cut his year-end price target for the S&P 500 for the second time in three months, as one of the most bullish research shops on Wall Street continues to play catch up with falling equity prices.
John Stoltzfus, chief investment strategist at Oppenheimer Asset Management Inc., said he now sees the S&P 500 finishing 2022 at 4,000, implying a roughly 12% upside from Friday’s closing level of 3,583.
The cut represents an 800-point reduction from the 4,800 year-end target that Stoltzfus debuted in July. Oppenheimer began 2022 with a year-end price target of 5,330, making it one of the most bullish shops on Wall Street.
Stoltzfus said the reduced price target is largely a reflection of the dwindling time left in the year for a market turnaround. At this point, it would take a “miracle” for stocks to claw their way back to 4,800 given the uncertain outlook for global markets and the economy.
However, Stoltzfus maintained that stocks should rebound swiftly once the Fed triumphs in its battle against inflation, as the repeated bear-market rallies seen this year “have shown where the market wants to go.”
“We have found over the course of our tenure in the markets that so long as monetary policy makers, government officials, business leaders and the consumer respectively address the problems at hand to work towards averting or resolving a crisis, history has shown that the issues of the day often in hindsight have proven not only to be navigable but in fact have often presented opportunities that result in future prosperity and growth,” Stoltzfus wrote in a note to clients and the media announcing the price-target cut.
Oppenheimer’s cut follows similar reductions made over the past month or so by rival investment banks, including Goldman Sachs Group GS, +2.24% and Citigroup C, +0.83%. Strategists at those two banks cut their S&P 500 price targets to 3,600 and 4,000, respectively. They both cited expectations that Federal Reserve Chairman Jerome Powell would need to keep U.S. benchmark interest rates higher for longer.
U.S. stocks were rallying hard on Monday, with the S&P 500 SPX, +2.65% up more than 95 points, or 2.6%, at 3,678, erasing all of the losses from Friday’s selloff. The Dow Jones Industrial Average DJIA, +1.86% advanced 540 points, or 1.8%, to 30,179, while the Nasdaq Composite COMP, +3.43% gained 340 points, or 3.3%, to 10,663.
The S&P has fallen more than 22% since the start of the year as inflation has buffeted the U.S. economy, and other economies around the world, forcing central banks to aggressively hike interest rates.