Wall Street’s biggest bear emerges into one of its biggest bulls
Wells Fargo Securities’ Christopher Harvey no longer holds the distinction of Wall Street’s biggest bear.
He’s now officially one of its biggest bulls.
The firm’s head of equity strategy raised his S&P 500 year-end price target Tuesday to 3,088, a 16% jump above his prior forecast of 2,665.
“We’ve been thinking about moving our price target ever since the beginning of the year. Once the Fed said, ‘Hey, we can be flexible. Hey, we can be patient,’ we knew at some point we knew we were going to raise our price target,” Harvey said during a first on CNBC interview on “Futures Now.”
Harvey had been hinting he’d change his price target as the S&P ripped higher in the early months of 2019. He released the new forecast in a research note Tuesday — with the index almost 25% off its December low.
He wrote in the note he “procrastinated somewhat.”
“It gets back to financials. For the market to go substantially higher, and for it to be sustained, we needed financials to get into the mix – to outperform, to really start to show some upside,” said Harvey. “That’s really what pushed us.”
The other rub was earnings season. Harvey made it clear that he wanted to see how first-quarter results would shape up.
Now with more than half of S&P companies reporting, Refinitiv reports 77% of earnings announcements have come in above estimates, 5% met expectations and 18% missed. If the remaining companies post earnings in line with estimates, EPS will be up 0.7% from the same period last year — smaller than the 2% drop the Street has been forecasting.
Despite the stronger-than-expected results, Harvey still believes earnings could surprise the Street on the downside. But he suggests the current environment driven by a dovish Federal Reserve could ease any potential trouble.
“They want the market to continue to go, and they want growth,” Harvey said. “I don’t think they’ll throw cold water on this rally.”
— CNBC’s Juan Aruego contributed to this report.