U.S. equities should rise into year-end amid stabilizing economic growth and increased chances for a tariff rollback, according to Evercore ISI.
Valuations are likely to remain near current levels as financial conditions will probably remain easy, and given earnings estimates for the S&P 500 Index into 2020, the gauge should be biased higher into year-end toward the 3,150 level, Evercore strategists including Dennis DeBusschere wrote in a note Nov. 10. The benchmark closed at a record last week, and futures were down 0.4% as of 9 a.m. Monday in New York.
Strategists have become increasingly bullish about the end of 2019, as more evidence emerges that a soft patch in U.S. economic performance may be over, U.S.-China trade tensions appear to have ebbed somewhat, and this time of year tends to be seasonally good for equities. Last week, JPMorgan Chase & Co. and Citigroup Inc. moved away from bets on gold in their asset allocations as risk-on mode takes hold.
The Evercore strategists screened for stocks that may have been caught in the recent outflow from momentum funds despite having attractive risk profiles. They included Chipotle Mexican Grill Inc., Walmart Inc., United Parcel Service Inc. and AutoNation Inc. in a list of about 30 components of the S&P 1500 Index that had high price momentum at the start of the quarter, underperformed recently and are seen as attractive, they said.
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