Investors Should Prepare for a Strong Stock Market Rebound in Q4, Analysts Say
October 12, 2023
**NEW YORK—**Wall Street analysts are increasingly bullish on the stock market, with some predicting a strong rebound in the fourth quarter.
Tom Lee, a well-known Wall Street analyst, said in a report that investors should prepare for a "Santa Claus rally" in the coming months. Lee noted that the Federal Reserve has taken a more dovish stance in recent weeks, which could lead to lower interest rates and a more favorable environment for stocks.
"The Fed is clearly trying to balance the risk of inflation with the risk of a recession," Lee said. "We believe the Fed will eventually stop hiking rates, which will be a positive for stocks."
Mark Newton, a technical analyst at Fundstrat Global Advisors, also sees a rebound in the stock market. He predicts that the S&P 500 index could rise to 4,607 points in the next month, which would be a gain of 6% from its current level.
Newton said that the war in Ukraine has had a limited impact on the long-term technical outlook for the market. He noted that market volatility during military conflicts is typically short-lived.
"We believe the market is near a bottom," Newton said. "With the combination of bearish sentiment and seasonal factors, we believe now is a good time to add risk assets."
Other analysts are also optimistic about the stock market. In a recent survey by the American Association of Individual Investors, 46% of respondents said they were bullish on stocks, the highest level in two months.
However, some analysts caution that the market could still be vulnerable to downside risks. In particular, they point to the ongoing war in Ukraine, which could lead to higher inflation and slower economic growth.
Overall, the consensus among analysts is that the stock market is poised for a rebound in the fourth quarter. However, investors should remain aware of the risks and take a diversified approach to their portfolios.
Other key factors recently:
- The SAFE's investment in the four major banks is a sign of government support for the banking sector. The banks have been struggling with rising bad loans and slowing economic growth.
- The PBoC's focus on risk prevention is a response to the recent increase in financial risks in China. The central bank has taken a number of measures to address these risks, including tightening regulations on shadow banking and deleveraging.
- The CPCA's data on car sales shows that the Chinese auto market is still growing, but at a slower pace than in previous years. The growth of new energy vehicles is a bright spot in the market.
- The minutes of the Fed's September meeting show that there is still some disagreement among policymakers about the future course of monetary policy. Some policymakers believe that the Fed should raise interest rates again to combat inflation, while others believe that the Fed should wait until there is more evidence of inflation.
- The rise in U.S. producer prices is a sign of inflation pressures in the U.S. economy. The Fed is closely monitoring inflation and could raise interest rates again if inflation continues to rise.
- The passing of the U.S. Treasury market's peak issuance is a sign that the U.S. government's borrowing needs are easing. This could lead to lower interest rates in the future.
- Putin's comments on oil production cuts are a sign that Russia is willing to cooperate with OPEC+ to support oil prices. The conflict in Israel could disrupt oil supplies and lead to higher oil prices.
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