Head of Global Investment Strategy at Wells Fargo: The market is about to experience a surge not see
According to Business Insider, Paul Christopher, the head of global investment strategy at Wells Fargo, stated in an interview with CNBC on Thursday that the stock market is about to experience a rise not seen in thirty years.
He pointed out that the current market situation is similar to 1995, with inflation declining and the economy "not collapsing", while the stock market rose sharply at that time, with the S&P 500 index reaching a historic high of 77 times.
Paul Christopher pointed out that if the Federal Reserve could be proactive enough, they are now in a good position. He predicted that the Federal Reserve would cut interest rates by 50 basis points in September and make several more cuts before the end of the year. He added:
We still have a great opportunity to achieve a soft landing for the economy
Since the Federal Reserve began raising interest rates in March 2022 to curb inflation, the market has been monitoring the trend of interest rate cuts. However, inflation has fallen far below its peak in the summer of 2022. According to the Bureau of Labor Statistics, the annual growth rate of the Consumer Price Index (CPI) in July was 2.9%
Paul Christopher said that Wells Fargo expects the stock market to be more volatile in the coming months, mainly due to geopolitical tensions and uncertainty brought about by the presidential election. If the Federal Reserve relaxes its policies appropriately, this wave of volatility may bring significant investment returns.
In addition, Paul Christopher pointed out that lower short-term interest rates are most likely to benefit financial and technology stocks. Because financial institutions can earn more income from deposits, while technology companies' earnings will also improve. He stated that this situation is very similar to the market situation in 1995.
At that time, financial stocks led the way, followed by technology stocks, and the stock market entered a general cyclical growth. We will definitely increase our investment in large stocks in these areas
Most stock market forecasters believe that as investors pay attention to the Federal Reserve's interest rate cut plan and monitor the trend of the US economy, the market will become more volatile in the coming months. Economists at the New York Federal Reserve predict that there is a 56% chance of the economy entering a recession by July next year.
